When one hand gives, the other taketh away. That’s how some consumers may feel about energy prices these days as high prices seem to just move from one part of the budget to another instead of disappearing.
U.S. households are expected to spend more on energy this October through March than recent winters due to a combination of higher fuel prices and increased heating demand because of forecasts for slightly colder weather than last year, the Energy Information Administration (EIA) said last week.
Bills for every type of fuel are expected to rise, with propane coming in at the low end with a 5% spike while natural gas could soar 28%. If winter proves 10% colder than expected, natural gas bills could surge 51%, EIA said. And even if the winter is 10% warmer, only propane prices would decrease from last year, down 12%, forecasts showed.
This all comes just as people have felt some relief at the pump, which means no inflationary relief for the holidays.
“This holiday, people are hoping for coal in their stockings because utility bills will go way up and pressure their finances, and the last thing they can tolerate is white snow,” said Jonathan Walker, executive director of Elevate’s Center for the New Middle Class, which researches behaviors and needs of financially strained Americans.
How much more will utility bills be?
Nearly half of U.S. households rely primarily on natural gas for heating, and they are forecast to spend about $930 this winter, 28% more than they spent last winter, EIA said.
The 4% of U.S. households that use heating oil as the primary space heating fuel will spend about $2,350 on average this winter, up 27%.
Electricity users will pay 10%, or an average of $1,360, more per household. Forty percent of homes rely on electric heat pumps or electric resistance heaters as the primary source for space heating. Nearly two-thirds of Southern homes primarily use electricity. Electric heaters are also commonly used as a secondary heating source in many U.S. homes.
Propane will rise the least, with households in the Northeast, Midwest, and South spending 5% ($80) more, on average. But only about 5% of all U.S. households use propane as the primary space heating fuel.
Will Americans be able to afford higher utility bills?
So far, most Americans have managed to pay, but the share of those falling behind is rising.
About 17% of U.S. households have either missed a utility bill or paid it late, a Bank of America/CivicScience survey showed last month. But the share jumped to 25% among households earning less than $50,000 a year.
“This suggests we should not be complacent on the impact of high energy prices on consumers,” Bank of America said.
Last year, even before fuel prices started to rise, about 29% of Americans surveyed by the Census Bureau said they had to reduce or forego expenses for basic household necessities to pay an energy bill.
“For many struggling families, higher prices can mean being forced to choose between heat, food or medication,” the National Energy Assistance Directors Association said last month.
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Does it matter where I live?
Yes.
Midwest natural gas users should expect to pay 32.9% more than last year, according to EIA. The South should expect to pay 23.9% more, the West 29.3%, and Northeast 22.7%.
Spending on heating oil, used mostly by Northeast homes (18%), should rise 26.6%, or $2,354, on average, from last winter, according to EIA estimates.
Electricity expenses are growing by 11% in the Northeast, and 12% in the South, EIA said. In the Midwest and West, winter expenditures are expected to average 8% more than last year, the administration said.
The small number of American propane users in the Northeast, Midwest, and South will spend 5%, or $80, more, on average, EIA predicted.
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Why is fuel so expensive this year?
Like everything else, price is determined by supply and demand. Not only are weather forecasters predicting a slightly colder winter this year, but inventory for various fuels is low.
For example, EIA forecasts natural gas consumption to rise an average 5% across the country at the same time inventories are expected to be 6% below their five-year average at the end of the month.
The East Coast is seeing particularly low inventories of distillate fuels, which include heating oil and diesel fuel. At the end of September, they stood at 25.5 million barrels, or 45% below the five-year average.
Northeast inventories are 57% below the five-year average, partly due to limited regional refining capacity, increased demand in the first half of the year and tighter world supply after Russia’s Feb. 24 invasion of Ukraine. Sixty percent of East Coast distillates are in the Northeast.
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What can Americans do to save on utilities this winter?
- Set your thermostat to the proper temperature. Use the built-in energy-saving functionality most of today’s thermostats have. According to Energy Star, homeowners will likely save at least $100 a year on energy bills with a smart thermostat.
- Change or clean a reusable air filter about every 30-90 days (shorter if you have pets, longer if you don’t). “Doing so doesn’t require any tools and it will keep your HVAC running efficiently and improve your indoor air quality. If you don’t swap them out, over time, dust and dirt will collect on the filter screen and can cause a blockage to your air ducts, which causes your system to work harder to maintain your desired temperature and thus result in higher-than-normal utility bills,” said Anthony Carrino, a home designer and developer and Trane Residential partner.
- Cover windows with plastic from the inside for extra insulation to keep cold air out.
- Run your ceiling fan clockwise. “Fans are not just for keeping you cool in the summer,” Carrino said. “Ceiling fans do a great job of circulating warm air that rises to the top of the room and redistributes it throughout the house.”
- Use an Energy Star qualified system and look for the Annual Fuel Utilization Efficiency rating of a gas furnace, which shows how much of the fuel you pay for is turned into usable heat. The higher the rating, the less fuel it takes to keep your home cozy.
- Ensure your system is working properly with seasonal maintenance.
What if I still can’t pay my utility bills?
If all else fails and you still find yourself struggling to pay your bills, find help. The Low Income Home Energy Assistance Program (LIHEAP) helps more than six million low-income families afford utilities.
If you don’t qualify for LIHEAP assistance, try a state social services agency or a nonprofit organization. You can also contact your gas, oil, or electric company about budget billing programs or new payment options, especially for customers with disabilities who are on Supplemental Security Income.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
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