Both prices and demand for residential space heating fuels are expected to rise significantly this winter (October 1999-March 2000) because of higher prices for crude oil and colder temperatures than the previous winter. Consumers of heating oil will be hit the hardest, with expenditures increasing by 44 percent in the base case. Propane expenditures could increase by 36 percent and natural gas expenditures by 19 percent, according to 1999-2000 Winter Fuels Outlook, a report from the Energy Information Administration (EIA).
The EIA analysis projects consumption, prices, and expenditures for three scenarios: normal winter weather; weather that is 10 percent warmer than normal; and weather that is 10 percent colder than normal (see table). Both consumption and prices were depressed last winter because of low crude oil prices, warmer weather than usual, and economic downturns in emerging global oil markets. This winter, temperatures are expected to be colder, the slumping economies to rebound, and production of crude oil to be reduced, putting pressure on demand for heating fuels. Even if temperatures this winter are as mild as last winter's, sharp increases in heating oil expenditures are expected because of the increase in the price of crude oil.
| Winter Heating Fuel Pricesa and Expendituresb | |||||||||
Heating Oil |
Propane |
Natural Gas |
|||||||
Consumption |
Average Price (Dollars per Gallon) |
Expenditures (Dollars) |
Consumption |
Average Price (Dollars per Gallon) |
Expenditures (Dollars) |
Consumption |
Average Price (Dollars per Million Cubic Feet) |
Expenditures (Dollars) |
|
| Actual | |||||||||
| 1996-1997 | 676.4 | 1.05 | 710 | 898.9 | 1.11 | 998 | 91.4 | 6.63 | 606 |
| 1997-1998 | 651.0 | 0.92 | 599 | 814.4 | 0.94 | 767 | 82.4 | 6.62 | 546 |
| 1998-1999 | 650.9 | 0.80 | 521 | 824.4 | 0.85 | 704 | 83.5 | 6.28 | 524 |
| 1999-2000 Projections | |||||||||
| Warm Weather | 630.9 | 0.98 | 617 | 814.8 | 1.02 | 829 | 82.5 | 6.89 | 568 |
| Base Case | 688.9 | 1.09 | 748 | 887.4 | 1.08 | 957 | 90.2 | 6.93 | 625 |
| Cold Weather | 746.8 | 1.20 | 892 | 959.9 | 1.14 | 1,096 | 97.9 | 7.02 | 687 |
| aNational average prices. bBased on typical per-household consumption by region. Source: Energy Information Administration |
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Most of the projected increase in natural gas expenditures stems from a return to normal winter weather temperatures. Demand for natural gas also may increase because of the growth in the number of gas space-heating customers (up about 1 percent). Since retail prices depend on wellhead gas prices, which are passed on with a lag because of monthly billing cycles and regulatory oversight, natural gas customers tend to experience more moderate increases in their bills than consumers of other space-heating fuels.
Propane prices have already increased significantly in response to rising crude oil prices. They are expected to continue rising until February and then decline toward the end of the heating season.
Supplies of these space-heating fuels should be adequate for even the coldest weather, according to the EIA report.
1999-2000 Winter Fuels Outlook; 11 pages, 2 tables, 11 figures. Available in electronic format only.
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URL: http://www.eia.doe.gov/emeu/plugs/plwinter.html
File last modified: November 19, 1999
