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U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585

FOR IMMEDIATE RELEASE
October 8, 1998

Good Chance for Lower Fuel Prices This Winter, But Total Heating Costs Should Rise

The Energy Information Administration (EIA) expects this winter's heating fuel prices to be lower than last winter's prices, particularly in the early part of the season. According to information released today in the Short-Term Energy Outlook, U.S. average prices for retail heating oil and propane this winter are expected to be 3 to 5 cents per gallon below their levels of last season. (EIA defines the winter season as the period from October through March.)

Despite some lower fuel prices, consumer heating bills are likely to be higher this winter because consumption is expected to rise sharply. Assuming normal weather for this winter compared with the very mild weather last winter, a sharp increase in demand for heating fuels is expected, with most of the increase occurring in the first quarter of 1999.

EIA estimates that, mainly because of expected demand increases, household winter heating fuel bills could rise this season by about 13 percent for those using natural gas, 3 percent for heating oil users, and 16 percent for propane users, compared to the 1997-98 season. The increase in heating bills would have been larger, except that larger-than-usual inventories and low world prices of crude oil are keeping prices low.

Other highlights from the Short-Term Energy Outlook include:

  • Stocks of natural gas, distillate fuel oil and propane are unusually robust as of September 30: distillate fuel stocks are estimated to have been 16 percent above the 1993-1997 end-September average, while propane stocks were a surprising 24 percent above average. Meanwhile, natural gas in storage (working gas) was about 6 percent above the 5-year average. The high pre-season heating fuel inventories are in marked contrast to the low pre-season inventory levels of the prior two years.

  • By the end of 1998, world oil stocks will have increased to a cumulative 550 million barrels, about 7 days of world supply. The main cause of this development has been weak worldwide demand, as a result of mild winter weather and the economic crises in East Asian countries. Despite the expectation of substantial increases in worldwide heating-related petroleum demand this coming winter, inventory levels may be trimmed only marginally next year because economic growth in the U.S. and worldwide is expected to slow in 1999.

  • Despite very high natural gas stocks, natural gas price volatility remains high, with spot and futures prices reacting sharply to any threat to continued supply stability, such as hurricanes. Demand is expected to be up 8.8 percent, or 6.5 billion cubic feet per day, from year-ago levels in first quarter 1999.

  • With the assumption that weather will be normal in the forecast, the chances are high that U.S. petroleum demand will grow more rapidly in 1999 than in 1998. This is because in first quarter 1999, under normal weather assumptions, heating degree-days are expected to be 18 percent higher than the relatively warm first quarter of 1998. Currently, EIA projects that U.S petroleum demand will show increases of about 0.8 percent in 1998 and about 1.7 percent in 1999.

The Short-Term Energy Outlook is published monthly on EIA's Internet Web Site to meet the public's demand for more timely energy data and forecasts. Users can view and download the forecast analysis, tables and charts by going to the EIA Home Page at http://www.eia.doe.gov and selecting "Forecasts" from the menu. The Internet address for direct access to the Outlook is: http://www.eia.doe.gov/emeu/steo/pub. In addition to the Internet releases, the Short-Term Energy Outlook is published in printed form in January, April, July and October. Printed copies of the Short-Term Energy Outlook, Fourth Quarter 1998 will be available later this month from the U.S. Government Printing Office, 202/512-1800 or through EIA's National Energy Information Center 202/586-8800.

The report described in this press release was prepared by the Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy.  The information contained in the report and the press release should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy position of the Department of Energy or any other organization.

EIA Program Contact: David Costello, 202/586-1468
EIA Press Contact: National Energy Information Center, 202/586-8800, infoctr@eia.doe.gov

EIA-98-23

Contact:

National Energy Information Center
Infoctr@eia.doe.gov
Phone:(202) 586-8800
FAX:(202) 586-0727


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