Release date: October 17, 2019 | Next release date: October 23, 2019
EIA expects U.S. winter heating fuel expenditures to decrease
The U.S. Energy Information Administration (EIA) expects that most U.S. households will spend less on major home heating fuels this winter (October 2019 through March 2020) than last winter. Although EIA’s Winter Fuels Outlook forecasts that expenditures will fall across most fuels, the declines are likely to be particularly significant for households that primarily use heating oil and propane. For homes relying on heating oil, EIA expects winter fuel expenditures to fall by an average of 4.4%, from $1,570 during the 2018–19 winter to $1,501 for the 2019–20 winter. Similarly, depending on the region, propane expenditures are forecast to fall by an average of between 12.1% and 17.3%, significantly more than the respective 1.2% and 1.3% average declines expected for households heating primarily with electricity and natural gas.
As explained in the latest edition of the Winter Fuels Outlook, the forecast declines in home heating expenditures are a function of both weather and energy prices. The National Oceanic and Atmospheric Administration (NOAA) expects this winter to be, on average, about 4% warmer than last year, as measured in heating degree days (HDD). HDD are a measure of how cold a location is over a period of time relative to a base temperature—typically 65 degrees Fahrenheit—and the higher the HDD estimate, the colder the temperatures are expected to be. As Figure 1 shows, EIA expects:
- Warmer weather will reduce demand for space heating,
- Household winter heating oil consumption will decline by 2.8% across the United States relative to last year, and
- Propane consumption in the Northeast and Midwest will decline by 2.7% and 6.0%, respectively, during the same period.
In addition to warmer weather, EIA also anticipates that this winter’s prices for heating oil and propane will be lower than last year’s. As of October 7, 2019, retail residential prices for heating oil and propane were at $2.95 per gallon and $1.86 per gallon (excluding taxes), respectively, lower than the year-ago prices of $3.29 per gallon and $2.37 per gallon, respectively. Furthermore, the Winter Fuels Outlook forecasts that prices for the two fuels will remain lower throughout the upcoming heating season relative to last year’s, and more specifically that:
- Average winter heating oil prices will drop 1.7% relative to last winter,
- Northeast propane prices will decline 9.6%, and
- Midwest propane prices will decline 12.0%.
These seasonal declines in the prices for heating oil and propane largely result from comparable declines in the prices of crude oil and natural gas (Figures 2 and 3). The lower price of heating oil—both current and forecast—can be attributed mostly to low prices for crude oil. EIA expects the price of North Sea Brent crude oil (a global benchmark for crude oil) to average $58.67 per barrel (b) throughout the 2019–2020 winter, compared with an average of $65.47/b last winter. Similarly, low propane prices reflect the current and forecast price of natural gas, which is already more than 28% lower than it was a year ago. EIA expects that it will remain nearly 24% lower this winter than during the previous winter.
EIA’s winter fuel forecasts are sensitive to changes in underlying assumptions, particularly weather. Temperatures tend to vary more than retail fuel prices during the winter, and recent winters provide a reminder that temperatures and weather can be difficult to forecast. The winters of 2013–14 and 2014–15 were generally colder than normal, but the winters of 2015–16 and 2016–17 were much warmer than normal. Recognizing this potential variability, the Winter Fuels Outlook includes a colder-than expected scenario where HDDs in all regions are 10% higher and a warmer-than-expected scenario where HDDS are 10% lower than forecast. Under the colder scenario, EIA forecasts that winter expenditures for households heating with heating oil will be $105 (7%) higher than last winter, and expenditures for households heating with propane will be $108 (5%) higher for those in the Midwest and about the same as last year for those in the Northeast. Conversely, in the warmer scenario, EIA forecasts expenditures for households using heating oil to be $222 (14%) lower than last winter, and $332 (24%) and $486 (26%) lower, respectively, for households heating with propane in the Midwest and Northeast.
U.S. average regular gasoline prices fall, diesel prices rise slightly
The U.S. average regular gasoline retail price fell 2 cents from the previous week to $2.63 per gallon on October 14, 25 cents lower than the same time last year. The Gulf Coast price fell by nearly 3 cents to $2.26 per gallon, the East Coast and Midwest prices fell by more than 2 cents to $2.46 per gallon and $2.48 per gallon, respectively, and the Rocky Mountain price fell by nearly 1 cent, remaining at $2.71 per gallon. The West Coast price increased by more than 2 cents to $3.67 per gallon.
The U.S. average diesel fuel price increased by less than 1 cent and remained at $3.05 per gallon on October 14, 34 cents lower than a year ago. The Rocky Mountain price increased by 2 cents to $3.04 per gallon, the West Coast price increased by 1 cent to $3.65 per gallon, and the East Coast and Gulf Coast prices increased by less than one cent to $3.04 per gallon and $2.81 per gallon, respectively. The Midwest price was unchanged at $2.97 per gallon.
Propane/propylene inventories decline
U.S. propane/propylene stocks decreased by 0.3 million barrels last week to 100.4 million barrels as of October 11, 2019, 10.7 million barrels (12.0%) greater than the five-year (2014-18) average inventory levels for this same time of year. Gulf Coast and Midwest inventories decreased by 0.8 million barrels and 0.3 million barrels, respectively. East Coast and Rocky Mountain/West Coast inventories increased by 0.6 million barrels and 0.2 million barrels, respectively. Propylene non-fuel-use inventories represented 4.6% of total propane/propylene inventories.
Residential heating fuel prices increase
As of October 14, 2019, residential heating oil prices averaged $2.97 per gallon, nearly 2 cents per gallon above last week’s price but nearly 40 cents per gallon below last year’s price at this time. Wholesale heating oil prices averaged $2.06 per gallon, 7 cents per gallon more than last week’s price but 34 cents per gallon less than a year ago.
Residential propane prices averaged $1.85 per gallon, more than 1 cent per gallon higher than last week’s price but nearly 55 cents per gallon lower than a year ago. Wholesale propane prices averaged $0.60 per gallon, 2 cents per gallon above last week’s price but 40 cents per gallon below last year’s price.
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Retail prices (dollars per gallon)
| Retail prices | Change from last | ||
|---|---|---|---|
| 10/14/19 | Week | Year | |
| Gasoline | 2.629 | -0.016 | -0.250 |
| Diesel | 3.051 | 0.004 | -0.343 |
| Heating Oil | 2.968 | 0.017 | -0.396 |
| Propane | 1.854 | 0.014 | -0.548 |
Futures prices (dollars per gallon*)
| Futures prices | Change from last | ||
|---|---|---|---|
| 10/11/19 | Week | Year | |
| Crude oil | 54.70 | 1.89 | -16.64 |
| Gasoline | 1.639 | 0.066 | -0.303 |
| Heating oil | 1.958 | 0.063 | -0.363 |
| *Note: Crude oil price in dollars per barrel. | |||
Stocks (million barrels)
| Stocks | Change from last | ||
|---|---|---|---|
| 10/11/19 | Week | Year | |
| Crude oil | 434.9 | 9.3 | 18.4 |
| Gasoline | 226.2 | -2.6 | -8.0 |
| Distillate | 123.5 | -3.8 | -9.1 |
| Propane | 100.445 | -0.328 | 18.147 |