You’ll be paying more to heat your home this winter

Heating oil is delivered to a home in Brooklyn, New York.
Andrew Harrer | Bloomberg | Getty Images

Americans got a break on their home heating bill last winter thanks to unusually high temperatures and low commodity and fuel costs, but this year they'll have no such luck.

The U.S. Energy Information Administration is forecasting double-digit percentage increases that will cost some home-owners and renters hundreds of dollars more in heating costs this year. There are big differences in how much more consumers will pay, based on where they live and how they heat their home, but the big takeaway is that rising commodity costs and a colder winter will put a chill on household budgets.

There is, however, a silver lining: While prices will be higher than last year, natural gas prices are expected to be comparable to the five years prior to 2015. Even better, spending for heating oil and propane is expected to be 32-percent and 18-percent lower, respectively, than during that same five-year period.

The EIA figures are based on temperature forecasts from the National Oceanic and Atmospheric Administration, which believes this winter will be 13-percent colder than last season. Again, there's some good news beneath a bad headline: Temperatures between October and March are expected to be 3-percent warmer than the 10-year average.

How much temperatures dip from region to region may also result in a bigger or smaller increase for some Americans.

The situation does not look good east of the Rockies. The Northeast and Midwest should experience temperatures that are about 17-percent more frigid, while the South will be 18-percent colder, according to the NOAA. The West, however, should be about 2-percent warmer.

Natural gas

The average household heated primarily with natural gas — nearly half of U.S. homes — can expect to see its bill rise by $116, or 22 percent, over last year. Residential natural gas price prices are projected to be the highest since the 2010-11 season.

Should temperatures run even colder than anticipated, record high stockpiles of natural gas that built up during 2015's warm winter should limit price swings, EIA said. There's also a lag between changes in benchmark natural gas prices and residential prices, because big buyers like utilities lock in prices many months ahead of time.

Still, natural gas prices are marching higher. They rose more than 4 percent on Thursday, hitting a high going back to December 2014. For the year, they are up nearly 43 percent.

One region that could see day-to-day price spikes is New England. While the EIA expects new pipeline capacity to tamp down prices in the peak winter months, it notes the Northeast still suffers from supply constraints.


Homes relying on electric heating will see the least sticker shock: Wintertime costs should be up an average of $49, or just 5 percent, from last year.

In the event of a colder-than-expected season, EIA sees electricity heating costs rising $81, or 9 percent, though it notes consumers likely wouldn't see the increase show up until later in 2017.

Again, the price change is likely to vary regionally. The region including Texas, Oklahoma, Arkansas and Louisiana likely will feel the most prices pressure, with the EIA forecasting a 6-percent price bump.

New England is also subject to price spikes, due to wintertime complications in the energy market caused by the region's shift toward a greater share of natural gas-generated electricity.

Heating oil

The Northeast is also the region most dependent on heating oil. This year, that's a bad title to hold.

Americans who warm their home primarily with heating oil will spend an average of $378 more this winter — a 38-percent increase. The jump is being driven by rebounding crude oil prices, which struck 12-year lows last winter.

In the EIA's worst case scenario, in which temperatures are 10 percent above NOAA's forecast, the average price increase could jump above $550.

Luckily for the 5 percent of U.S. homes that still depend on heating oil, refiners have been turning out lots of distillate fuels — which include heating oil — leading to a big build-up of stockpiles, which tends to keep a lid on prices. Still, severely cold weather could force the United States to resort to importing more fuel, EIA said.


The story is similar for propane-heated houses, though the magnitude of the bad news largely depends — again — on location.

Midwest propane users will have to shell out an additional $290 this year, or 30-percent more, while Northeastern households are expected to spend $346 more, a 21-percent jump.

According to the EIA, current stockpiles of propane are high enough that they should be able to see their way through a spike in demand, including the event of bitterly cold temperatures or higher exports. In addition to record-high inventories, improved rail networks should keep price spikes in check.