U.S. households that use natural gas for heating or reside in the West are in for a treat this winter, expecting to spend less on heating costs compared to the previous year. The U.S. Energy Information Administration (EIA) recently released its 2023 Winter Fuels Outlook, forecasting a 21% drop in residential natural gas prices from the previous winter. Natural gas remains the primary heating source for a majority of U.S. households.
Statements from EIA Administrator Joe DeCarolis
EIA Administrator Joe DeCarolis emphasized the consistent drop in natural gas prices this year in comparison to 2022. “Even with the potential for colder winter temperatures, households using natural gas are predicted to enjoy lower heating bills,” DeCarolis remarked.
Heating Costs Outlook for Different Energy Sources
In contrast, households relying on propane and electricity for heating will likely witness stable costs. Homes that employ heating oil might see a slight uptick in heating expenses, contingent on actual winter temperatures.
Inventory Levels and Predictions for Heating Fuels
Despite the U.S.’s typical consumption pattern, where more heating fuels are used than produced in winter, current inventory levels for most heating fuels exceed the five-year average. This stockpile is credited to the mild end of the 2022–2023 winter season. Specifically, the EIA anticipates U.S. natural gas stocks to close October with a 6% surplus over the five-year average. Propane stocks have an even brighter outlook, sitting 17% above the same benchmark.
Key Insights from the October Short-Term Energy Outlook
Other key findings from the October Short-Term Energy Outlook:
A forecasted decline of 280,000 barrels per day in global petroleum inventories for the latter half of 2023 is attributed to OPEC+ cutting down crude oil production targets and Saudi Arabia’s ongoing voluntary production reduction. This shrinking supply is set to elevate oil prices in 2024, with the Brent crude oil spot price expected to average $95 per barrel.
The EIA projects natural gas to fuel 42% of U.S. electricity generation this year, a consequence of falling natural gas prices, the phasing out of U.S. coal-fired power plants, and the introduction of 5 gigawatts of high-efficiency natural gas-fired generators. A slight dip to 41% is forecasted for 2024, still marking an increase from 2022 levels.
The future appears bright for renewables, predicted to constitute a quarter of U.S. electricity generation in 2024. This growth can be attributed to major additions in wind and solar energy capacities. DeCarolis noted, “With coal’s diminishing role in electricity generation, we anticipate natural gas and, especially, renewables to bridge the gap.”
Accessing the Full Report
The comprehensive October 2023 Short-Term Energy Outlook can be accessed on the EIA’s official website.