U.S. Consumers Are Set to Pay Far More for Energy This Winter
(Bloomberg) -- U.S. consumers face a more expensive winter than last time around, especially those who keep their homes warm with propane or heating oil, the U.S. Energy Information Administration said.
Spending on energy for those households primarily using heating oil will rise 43% compared with last winter, the agency said in a base-case forecast published as part of its Winter Fuels Outlook on Wednesday.
Expenditure on energy by households reliant on propane will increase 54% in the base case, it said. The comparable gains for households mostly using natural gas and electricity are seen at 30% and 6%, respectively.
U.S. prices for natural gas and oil are trading close to multi-year highs amid a global squeeze on supplies.
For households using gas, heating oil or electricity, this winter will be the costliest since at least 2014-2015, according to the data. Fuel costs will rise even if the coming months are 10% warmer than normal. If the winter is colder than average, propane expenditures will almost double, while heating oil costs will jump 59% and gas bills will rise by half.
“The main reason wholesale prices of natural gas, crude oil, and petroleum products have risen is that fuel demand has increased from recent lows faster than supply, in part, because of economic recovery after the first year of the Covid-19 pandemic,” the EIA said. “To varying degrees, these increases in wholesale prices are being passed through to consumers.”
Meanwhile, supply limitations at U.S. coal mines are making it difficult for power producers to boost electricity output from the fuel. Utilities are set to consume 521 million tons this year, lower than the forecast a month ago, when utilities were expected to burn through 537 million tons of the dirtiest fossil fuel. That’s “likely the result of constraints on coal supply and low coal stocks,” according to the EIA. The agency said utilities’ difficulty boosting coal power is is contributing to upward price pressure on gas, a competing fuel for electricity generation.
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