Homeowners should brace for a costly winter.
The U.S. Energy Information Administration projects costs will increase for all home-heating fuels between October and March. The average homeowner will spend about 10 percent more to heat their home compared to a year ago.
Last year the average winter fuel bill was $889. This year it's expected to jump to $977. CNBC correspondent Sharon Epperson, author of "The Big Payoff," explains why energy costs are rising and what you can do to keep your heating fuel bills down.
Why are energy costs rising?
Higher crude oil prices are to blame. Crude oil prices soared to over $93 a barrel early Monday morning — having now spiked 50 percent so far this year. Some analysts are predicting oil prices could hit $100 this winter. The price of crude oil directly effects heating oil prices, as big oil companies refine crude into heating oil, those high prices will be pass one and consumers will feel the pain.
Wholesale heating oil prices are a good indication of how high retail heating oil prices are headed, and so far this year those prices have soared over 50 percent. Since supplies of heating oil are much lower than they were this time last year, there are also concerns that there may not be adequate supply to meet the demand if it's a really cold winter. Record high crude oil prices are also helping to lift the price for other fuels — even natural gas prices are up 14% this year.
Why aren't consumers panicking?
Consumers haven’t felt the pain of high oil prices, yet. But wait until you turn on the heat in your home. As winter approaches and it gets colder, and the demand for heating fuels will go up, and if crude prices stay at these levels or continue to soar, heating oil prices will increase even more.
Here is a breakdown of what homeowners can expect to pay for heat this winter vs. last winter — based on crude prices staying in the $70 to $80 range. Keep in mind these costs could escalate significantly, if oil stays above $90 this winter.