EIA forecasts energy prices comparable to previous winter

Heading into the cold season, the Energy Information Administration was predicting winter heating costs to be largely comparable to the previous year.

“We expect that most U.S. households will spend about the same or less on energy than they did last winter, depending on a household’s main space-heating fuel and the region where they live,” said the EIA report released in October. “Generally, retail energy prices in our forecast are less than they were last winter, but temperatures across much of the country are set to be colder this year, meaning homes will use more energy for space heating. The combination of lower prices and colder weather results in relatively little change in expenditures.”

The exception may be the Midwest, where natural gas prices are expected to increase by about 11%. The price hike is due to the region having a mild winter a year ago.

“In that region, we expect a return to more normal temperatures that will outweigh the effect of lower energy prices and cause spending on heating fuels to rise by between 2% and 11%, depending on the energy source, in the coming winter,” the EIA report said.

The Henry Hub natural gas spot price rose by 15%, and the EIA expects that price to continue rising through the end of 2024 and into 2025 as liquefied natural gas exports, a component of total natural gas demand, increase.

“There’s a lot of uncertainty about the weather over an entire season – not to mention uncertainty over commodity prices,” EIA Administrator Joe DeCarolis said.

With that said, the EIA expects 45% of U.S. homes that primarily heat with natural gas to use about 5% more than last year.

“Even with increased consumption, the U.S. average price for natural gas for residential consumers in our forecast is 4% less than last winter, resulting in negligible change in winter bills for natural gas … with forecast expenditures of about $600 per household,” the EIA report said.

The EIA is reducing its forecasted price for Brent crude oil through the end of 2025. It’s expected to average $78 per barrel next year, $7 less than the administration’s previous forecast.

Crude oil production in the U.S. will hit a record high of 13.5 million barrels per day in 2025, the EIA said.

“Although we reduced our crude oil price forecast, crude oil prices have risen in recent days because of escalating conflict in the Middle East, raising the possibility of oil supply disruptions and further crude oil price increases,” the EIA report said.

Lower crude oil prices also mean a dip in the expected price of petroleum products. Of those products, propane saw the largest forecast drop, from 84 cents per gallon in September to 72 cents per gallon in October.

Diesel is forecast to average $3.50 per gallon in 2025, a 5% decrease from the previous EIA short-term outlook.

According to the EIA, the U.S. averages for electricity consumption, prices and expenditures are largely unchanged from last winter.

“U.S. households that primarily use electricity for heating can expect to spend 2% more on their electricity bills this winter, largely because of slightly increased expected electricity consumption,” the report said. “Although we don’t expect much change in the average U.S. residential price of electricity this winter, increases may occur in some regions, while other regions may have slightly lower prices.”

The full short-term energy outlook is available on the EIA website. LL