The government forecast Tuesday that most households will pay more for heat this winter. Heating oil users will catch a slight break but will still pay near-record prices to keep warm.
Prices for natural gas, electricity and propane are expected to be higher, the primary reason that more than 90 percent of U.S. homes will incur higher heating expenses.
Natural gas users will see the biggest percentage increase after two years of historically low prices. Their heating bills are likely to rise to an average of $679, the Energy Department said in its annual outlook for heating costs. That is about 13 percent higher than a year ago but still 4 percent below the average for the previous five winters.
Homes relying on electricity for heat, about 38 percent of the U.S., will likely pay about 2 percent more compared with last year.
For heating oil customers, there is good news and bad. Their average bill is expected to drop 2 percent. But they’ll still pay an average of $2,046, the second highest on record behind last year’s $2,092.
Just over half of U.S. households use natural gas for heating. Many of the 38 percent of U.S. households that use electric heat live in warm regions where heating demand is not high. About 6 percent use heating oil, but those homes tend to be in New England and New York, where winter heating needs are high.
Some analysts are concerned about a spike in heating oil prices. That’s because the fuels that refiners make alongside heating oil, including diesel and jet fuel, are in high demand around the world and inventories are low.
If there’s one type of product that could catch fire and go higher, it’s heating oil, said Tom Kloza, oil analyst at GasBuddy.com.
Natural gas is expected to average $11 per thousand cubic feet, the government said. That’s $1.33 more than last year, but still below the nearly $13 per thousand cubic feet that homeowners paid in the 2008-09 winter.
The Energy Department expects temperatures in the Northeast to be about 3 percent colder than a year ago, resulting in a 3 percent increase in consumption of heating oil. Bills will be lower, however, because the average price for heating oil will drop to $3.68 a gallon from $3.87. About 25 percent of homeowners in the Northeast use oil for heat.
But the government cautions that if temperatures are about 10 percent below expectations nationally, heating oil costs could rise around 9 percent from a year ago. That would mean an average bill of $2,280, a record.