In the US Energy Information Administration’s (EIA) latest winter fuels outlook, the agency expects higher heating oil prices and a slightly colder winter compared with last year will contribute to households across the US spending more on heating this winter (October–March) compared with the past two winters.
“About 4% of all US households use heating oil as the primary fuel for space heating, and the vast majority of these households are concentrated in the Northeast. About 18% of households in this region use heating oil for space heating, down from 27% 10 years ago. We forecast that households that use heating oil as the primary space heating fuel will spend $1,734 on average this winter season, 43% more than last winter,” EIA said.
Higher forecast consumer heating oil expenditures primarily reflect higher retail heating oil prices. Retail heating oil prices are rising in the US because crude oil prices are higher and inventory levels are lower compared with previous winters. Northeast US distillate fuel inventories (which include heating oil and diesel fuel) totaled 25.8 million bbl on Oct. 8, which is 33% less than the previous 5-year average for that week. The low inventory levels will likely increase heating oil prices, which EIA expects will average $3.39/gal this winter, a 33% increase over last winter.
“However, we do not expect significant supply disruptions in the Northeast because it has several alternative sources of supply, including local refinery production, shipments from other regions in the US, and waterborne imports from Europe.
“Distillate inventory levels are low in other Atlantic Basin markets, however, which means distillate prices would need to be relatively higher in the Northeast for the region to import distillate from other markets.”
In addition, EIA expects this winter to be colder than last winter, based on the National Oceanic and Atmospheric Administration’s forecasts for slightly lower temperatures this year than last year, which will contribute to more heating fuel consumption per household.
“Weather expectations are key inputs in our energy consumption forecast for higher household energy expenditures this winter compared with last winter. Because fewer houses now use home heating oil, we forecast US demand for home heating oil to average 390,000 b/d this winter, down slightly from last winter. We forecast that heating oil consumption per household, however, will increase this winter compared with last winter because of the expected colder temperatures,” EIA said.
For the winter of 2021–22, EIA forecasts heating oil consumption per household will average 511 gallons, up nearly 8% compared with last winter. In the Northeast, where space heating with heating oil is most prevalent, EIA expects this winter to be 4% colder than last winter.
