Winter heating bills are predicted by EIA to be lower this year than last.
View full sizeA man walks through steam as it rises from a grate in Cleveland last January when arctic temperatures twice blasted through the region. Opinion is divided about a repeat this winter. CLEVELAND, Ohio -- Consumers can expect to see lower heating bills this winter compared to last year because it won't be as cold, the U.S. Energy Information Administration is predicting.
In its first Winter Fuels Outlook of the season, the EIA this week said a winter warmer than last year, along with plentiful and moderately priced supplies of natural gas, propane and heating oil are good news for consumers.
The EIA's cost prediction, though, is based on a winter-weather forecast issued earlier by the National Oceanic and Atmospheric Administration's Climate Prediction Center.
The NOAA's December through February updated long-range forecast is scheduled for next week, when the focus will be the position of the fast-moving, high-altitude Jet Streams, which last January allowed the arctic temperatures normally contained at the top of the world by the Polar Vortex to fly south and invade much of the nation.
NOAA's earlier temperature forecasts call for about a one-in-three chance of warmer than normal temperatures in to January for a wide swath of the nation's midsection, including Ohio. But the forecasters did not predict late-winter warmer temperatures for most of that swath, including nearly all of Ohio -- except the very northern counties. Those models will be refined next week.
Meanwhile, a series of volcano eruptions in recent months has clouded things a bit more as the dust and aerosols thrown in the atmosphere have tended to filter sunlight in the northern hemisphere, leading some private forecasters to speculate about winter being a little colder than earlier forecasts predicted. The volcano eruptions are not considered as important as the Jet Streams, however.
The EIA appears to be on slightly more solid ground with its look at fuel prices. Here is a summary for each fuel:
Natural gas
Natural gas, the predominate fuel in Greater Cleveland, Akron and Youngstown, will be only about 6 percent more costly than a year ago, says the EIA. This small increase can be attributed to constantly increasing shale gas production that is now expected to fill winter storage by Nov. 1 nearly to the levels of last year.
"Rising domestic natural gas production this year, along with a mild summer that resulted in less electricity generation to meet air conditioning demand, contributed to the record build in natural gas inventories," said Adam Sieminski, head of the EIA, in a statement issued with the outlook.
"Even if this winter is as cold as last year's, the net withdrawal from natural gas inventories over the heating season would not be as large as last winter's draw-down because domestic gas production this winter is expected to be significantly higher than it was last winter," he added.
Natural gas demand, assuming the weather forecast is correct, is expected to run 13 percent below last winter, and the agency is expecting the national commodity price of gas to average about $4.19 per 1,000 cubic feet, or Mcf, in January.
After last January's "polar vortex" events, the commodity price of natural gas shot up to $5.56 per Mcf in February, falling slowing to $4.86 in March. With those spikes in mind, the agency included a proviso that it is uncertain about future winter prices.
The American Gas Association's Sept. 26 bulletin to member utilities predicted gas over the winter would "huddle around $4.02" per Mcf.
The January contract price closed Thursday at $4.035 on the New York Mercantile Exchange, where prices are set. October contracts, closed last week at $3.98. And November contracts, which will be traded until the end of this month, closed at $3.855 Thursday.
Ohio commodity prices are much lower, enabling some retailers using local gas to offer what appears to be discount prices. Price reports are available here.
Columbia Gas of Ohio and Dominion East Ohio gas continue to offer monthly variable prices that are based on the NYMEX prices, a good bet, judging from the current NYMEX "future strip" of contract prices for the winter and into next year.
Propane
Propane, used in about a third of the homes across the Midwest, including many rural Ohio counties, will cost about 24 percent less this winter than it did last year and households that use propane, should see heating bills about 34 percent lower, assuming the temperature forecasts are accurate.
The EIA said production of propane at natural gas liquids processing plants is rising and over the winter is expected to run at 12 percent above a year ago production. Storage levels now are the highest they have been since 1993.
On the downside, record corn production and a wet and cold fall could boost farm demand for the fuel to dry the harvested corn, the agency noted.
The Public Utilities Commission of Ohio on Thursday issued a consumer advisory urging consumers to contact their suppliers, arrange for an immediate fill-up and negotiate a schedule of deliveries for the winter so the retailer will have a better idea of demand.
Heating oil
Heating oil, the predominate fuel in the Northeast states but also used by some households in rural Ohio, is expected to cost about 6 percent less this winter than it did a year ago, the EIA said, reflecting lower oil prices.
On the downside, stockpiles are at the low end of the average levels for this time of year, meaning an unexpected cold snap and the resulting demand could drive up prices -- unless the industry can import more heating oil from Europe. But new federal regulations limiting sulfur content of the fuel could hamper moving some of the fuels around the region.
Electricity
Midwest Electricity prices are projected to be about 4 percent higher this winter than they were a year ago, but monthly bills, based on the current weather forecasts, should be about 3 percent lower.
Electricity prices tend to follow natural gas prices, the agency said, noting that the New England region is in the most danger of seeing winter price spikes because it lacks a developed gas pipeline system. That and the scheduled closing of the Vermont Yankee power plant before Dec. 31 could contribute to significantly higher prices there.