There will be a decrease in heating costs for households in the United States relying on natural gas for warmth, the U.S. Energy Information Administration (EIA) said in its 2023 Winter Fuels Outlook released yesterday.
The report anticipates residential natural gas prices during the upcoming winter will be approximately 21 percent lower than the previous winter, making it an economically favorable heating option for many households. Natural gas remains the primary heating source for households across the nation.
“Natural gas prices this year have consistently shown a downward trend compared to 2022. Even if we experience a colder winter than forecasted, households using natural gas for heating can expect to pay less for their heat this season,” stated Joe DeCarolis, Administrator of the EIA.
In contrast, costs for households utilizing propane and electricity for heating are expected to remain relatively stable. However, for homes using heating oil, the EIA predicts slightly higher heating expenses this winter. The actual costs may be influenced by temperatures that are warmer or colder than anticipated, impacting heating oil prices.
During the winter, the United States typically consumes more heating fuels than it produces, emphasizing the importance of inventories in determining commodity prices. As the country approaches the winter heating season, inventories for most heating fuels are currently above the five-year average, primarily due to a mild end to the 2022–2023 winter. The EIA projects that U.S. natural gas inventories will end October at 6 percent above the five-year average, and propane stocks are presently 17 percent above the same average.
The Winter Fuels Outlook serves as a supplement to EIA’s October Short-Term Energy Outlook (STEO), with updates planned monthly through February to reflect changes in commodity prices and temperatures.
Other Highlights from the October STEO include:
Oil: EIA forecasts a global decrease in petroleum inventories by approximately 280,000 barrels per day during the second half of 2023. This reduction is attributed to reduced OPEC+ crude oil production targets and the continued voluntary production cut from Saudi Arabia. Consequently, EIA anticipates higher oil prices in 2024, with the Brent crude oil spot price averaging $95 per barrel that year.
Electricity: EIA foresees natural gas contributing 42 percent to U.S. electricity generation in 2023, owing to lower natural gas prices compared to 2022, the ongoing retirement of U.S. coal-fired electricity generators, and the introduction of 8 gigawatts of high-efficiency natural gas-fired generators in 2023. The share of electricity generation from natural gas is expected to decrease slightly to 41 percent in 2024.
Renewables: EIA predicts continued growth in renewables as a share of U.S. electricity generation, reaching one-quarter of the total generation in 2024. This growth is driven primarily by substantial increases in wind and solar electricity-generating capacity, showcasing the transition towards cleaner and more sustainable energy sources.