US projects lower heating bills this winter, forecasts drop in energy prices, warmer weather

By DAVID SHARP, Associated Press

PORTLAND, Maine (AP) — Some U.S. households can expect to save hundreds of dollars this winter with a drop in heating bills, thanks to a combination of lower energy prices and warmer weather across most of the country, the U.S. Energy Department predicted Tuesday.

The department's annual outlook calls for lower heating bills, with the biggest savings for those who use propane or oil to heat their homes. The government predicts a 25 percent drop for homes using heating oil and an 18 percent drop for homes using propane, compared to last winter.

The outlook is based on a National Oceanic and Atmospheric Administration forecast that calls for warmer weather across all regions except the West, which is expected to be slightly cooler.

People using natural gas and electricity for heat also can expect to see a savings this winter. Heating bills for homes using electricity should drop about 3 percent and natural gas about 10 percent, the Energy Department said.

"If winter temperatures come in as expected by U.S. government weather forecasters, U.S. consumers will pay less to stay warm this winter no matter what heating fuel they use," said Adam Sieminski, administrator of the U.S. Energy Information Administration.

The news is especially good in the Northeast, which is most reliant on heating oil.

Heating oil prices were at a 10-year low in the most recent survey by the state of Maine, where nearly 70 percent of homes rely on heating oil during the state's harsh winters.

"It's nice to have Maine consumers catch a break because it has been a rough few years with energy bills," said Patrick Woodcock, director of the governor's energy office.

If the forecast holds, it'll mean hundreds of millions of dollars that U.S. residents can save or spend elsewhere. But judging by last year's forecast, consumers probably shouldn't spend the savings just yet.

Last year, the forecast called for warmer temperatures across the country. That held true for the most part but not in the East, which suffered through a cold and snowy winter. Boston recorded more than 100 inches of snow — nearly 65 inches in February alone — and set a new snowfall record.

With that caveat, here's a breakdown by heating fuel of what's expected for households this winter:

— HEATING OIL: Heating oil has tracked downward with lower crude oil costs, which dropped from $115 a barrel in June 2014 to below $50 Tuesday. Supplies should be adequate unless both the U.S. and Europe experience severely cold temperatures at the same time, the Energy Department said. It predicts savings of $459 per home at a cost of $1,392 to heat this winter.

— NATURAL GAS: Inventories are 15 percent higher than last year at this time, and production should see a tiny bump this winter. Residential natural gas prices are expected to drop 4 percent. Combined with warmer weather, the typical home using natural gas will pay $578 this winter, a $64 decline from last winter.

— ELECTRICITY: Electricity is the only energy source whose price is not dropping. The costs are expected to be flat, but consumers will still pay less because of warmer winter temperatures. If the forecast holds, homes using electricity for heat will pay $930, $30 less than last year. The Northeast remains susceptible to price spikes caused by constrained natural gas supplies, which is used for power plants.

— PROPANE: U.S. inventories are 24 percent higher than they were a year ago, and the supply should benefit from pipeline improvements, growing production and expanded rail capacity to bring supplies from Canada, the Energy Department said. Homes primarily using propane are expected to spend $1,437, which is $322 less than last winter.

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