Space Heating Fuel Prices in Winter 2022: US EIA Forecast

Michael Tobias
November 23, 2022
7 Minutes Read
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KEY TAKEAWAYS

- US energy costs have been increasing since the start of 2022, and this will affect space heating costs during winter.

- The Energy Information Administration published a Short-Term Energy Outlook with winter price forecasts for the main heating fuels: natural gas, heating oil and propane.

- Natural gas is expected to reach $15.37 per MCF in winter 2022-2023, up from $12.99 per MCF last winter.

- Heating oil prices have increased sharply since 2021. The EIA is forecasting $5.14/gallon, which represents a 32% increase from $3.90/gallon last winter.

- Propane prices have remained almost unchanged, which is great news for users. The average price was $2.66/gallon in October 2021 and October 2022.

The cost of energy products and services has been on the rise since 2021, and this has an impact on space heating costs during winter. The latest Consumer Price Index report revealed that energy prices were up by 17.6% in the 12-month period ending in October 2022, and they can also be broken down by category:

  • Fuel oil prices are up by 68.5%
  • Natural gas prices are up by 20.0%
  • Electricity prices are up by 14.1%

Regardless of the energy source used for space heating, building owners can expect higher costs this winter compared with last year. However, this also means that energy conservation measures now offer a higher return on investment.


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The US Energy Information Administration has published price forecasts for the main fuels used in combustion heating systems: natural gas, heating oil and propane. Here we will provide an overview of their main findings.

US EIA Natural Gas Price Forecast

natural gas-Nov-23-2022-04-14-51-1257-PM

Natural gas is important for both space heating and power generation. Solar panels and wind turbines generate electricity at low cost, but their output is variable because sunlight and wind cannot be controlled. Since gas-fired turbines can respond very fast, many power grids rely on them to fill the gap between other energy sources and consumption. Natural gas is also used for space heating by over 60 million US households.

The EIA Short-Term Energy Outlook forecasts a US average gas price of $15.37/MCF for end consumers in winter 2022-2023, which represents an 18% increase from last year. The EIA also provides a price comparison by region:

US Region

Winter 2021-2022 Natural Gas Price

Winter 2022-2023 Natural Gas Price

Difference (%)

Northeast

$14.28/MCF

$16.22/MCF

14%

Midwest

$10.84/MCF

$13.50/MCF

25%

South

$14.28/MCF

$15.83/MCF

11%

West

$14.13/MCF

$16.80/MCF

19%

US Average

$12.99/MCF

$15.37/MCF

18%

According to US EIA forecasts, the Henry Hub natural gas spot price will remain above $6.00/MMBtu between November 2022 and March 2023. Gas storage levels are 4% below historic average, and LNG exports have also contributed to the recent price hike. The EIA believes that gas prices will drop to around $5.46/MMBtu in 2023, as winter ends and production catches up with consumption and exports.

US EIA Heating Oil Price Forecast

heating oil-1

Heating oil prices are considerably higher than last year: heating oil had an average price of $3.90/gallon in winter 2021-2022, and the Short-Term Energy Outlook forecasts a price of $5.14/gallon in winter 2022-2023.This means building owners who rely on this fuel can expect a 32% increase in their space heating cost (assuming the same consumption as last year). In this case, the EIA does not provide a price breakdown by region.

Only 4.1% of US households rely on heating oil as their main fuel for space heating, but the fraction increases to 33% in New England states. Fuel inventories in the region are 44% lower compared with 2021, and imports have been 38% lower in 2022. Both of these factors contribute to higher prices.

  • The EIA gathers heating oil price data for 21 states and the District of Columbia.
  • The state with the lowest price was Nebraska ($4.28/gallon), and the state with the highest price was Delaware ($6.13/gallon).

Unlike natural gas, which arrives by pipe as a utility service, heating oil must be delivered by truck. Gasoline prices were up by 17.5% in the 12-month period ending in October 2022, and this also affects the delivery costs associated with heating oil.

US EIA Propane Price Forecast

propane

Unlike heating oil prices, propane prices are almost the same as last year. The average price reported by the US EIA was the same in October 2021 and October 2022: $2.66/gallon. The Short Term Energy Outlook breaks down the price in three regions:

US Region

Winter 2021-2022 Propane Price

Winter 2022-2023 Propane Price

Difference (%)

Northeast

$3.33/gal

$3.33/gal

0%

Midwest

$2.30/gal

$2.20/gal

-5%

South

$3.09/gal

$2.87/gal

-7%

As you can see in the table above, the Northeast can expect the same propane prices as last year. In the Midwest and South, average propane prices are expected to decrease slightly with respect to winter 2022-2023.

Only 5% of US homes use propane for space heating. The states with the highest consumption are Vermont, New Hampshire, South Dakota, North Dakota, Iowa, and Montana - the fraction of homes using propane increases to more than 13%.

Tags Space Heating natural gas energy news winter heating costs heating oil propane

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