By Nathalie Voit
According to a special report released by the Energy Information Administration (EIA), U.S. retail prices for energy are expected to climb to multi-year highs. The agency predicts rising commodity prices to affect residential prices for all four major heating inputs for U.S. households: natural gas, propane, heating oil, and electricity.
The pandemic-induced increase in energy prices means U.S. households will have to shoulder the extra costs moving into the winter of 2021 through ’22. Apart from higher residential bills due to pricier fuel inputs like natural gas and propane, a colder-than-average expected winter will also weigh on U.S. households.
U.S. households that heat primarily with propane will see the sharpest increases in their residential energy bills, according to the EIA. The agency expects propane costs to rise by 54% on average this winter compared to last winter, although only 5% of U.S. households heat with the input.
The cost of heating oil is similarly expected to rise by approximately 43% from last year, “59% more in a colder winter and 30% more in a warmer winter.”
The third costliest fuel input this winter will be natural gas, the agency reported. The agency predicted nearly one in two U.S. households that heat primarily with the fuel to “spend 30% more than they did last winter on average —50% more if the winter is 10% colder-than-average and 22% more if the winter is 10% warmer-than-average.”
The EIA also predicted electricity prices to increase by 6% this year, affecting approximately four in 10 U.S. households that heat primarily with the fuel source.
Depending on where people live and which heating fuel they rely on, prices will vary.
U.S. households reliant on heating oil are expected to pay $1,734 this winter, up from $1,210 last year. U.S. households using electricity as their primary fuel source will pay on average $1,268, up from $1,192 last winter. If using natural gas, the average U.S. household can expect to pay $746, up from $572 last winter. Meanwhile, households using propane will see their energy bills increase by $631 this winter, according to the EIA’s Winter Fuels Outlook.
“As we have moved beyond what we expect to be the deepest part of the pandemic-related economic downturn, growth in energy demand has generally outpaced growth in supply,” EIA acting Administrator Steve Nalley said. “These dynamics are raising energy prices around the world.”
The forecast arrives amid last month’s record-high Consumer Price Index (CPI), which saw consumer prices rising 5.4% year over year.
According to BLS data, energy prices in September moved up 1.3% and are now 24.8% costlier than last year. The persistent price increases across the index have economists and policymakers worried about the possibility of ‘stagflation.’
