The U.S. Energy Information Administration (EIA) expects U.S. households that heat with natural gas or are in the West will spend less on heating costs this winter than last winter. In its 2023 Winter Fuels Outlook, EIA forecasts residential natural gas prices this winter will be about 21% lower than last winter. Natural gas is the most common source of heat for U.S. households.
"Natural gas prices this year have been consistently lower than in 2022. Even if this winter is colder than forecast, we still expect households heated by natural gas to pay less for heat this winter," said EIA Administrator Joe DeCarolis.
Costs for households heating with propane and electricity are likely to remain relatively flat. For homes that use heating oil, EIA expects that heating expenses will be somewhat higher this winter. Warmer-than- or colder-than-expected temperatures could affect heating oil costs
The United States typically consumes more heating fuels than it produces during the winter, so inventories become an important factor in commodity prices. Heading into this winter heating season, inventories for most heating fuels in most of the country are above the five-year average, following a relatively mild end to the 2022-2023 winter. EIA expects U.S. natural gas inventories will end October 6% above the five-year average, and propane stocks are currently 17% above the five-year average.
The Winter Fuels Outlook is a supplement to EIA's October Short-Term Energy Outlook (STEO), and EIA will update it every month through February to reflect changes in commodity prices and temperatures.
Other highlights from the October STEO include:
- Oil: EIA forecasts that global petroleum inventories will decrease by about 280,000 barrels per day in the second half of 2023. This decrease is due to reduced OPEC+ crude oil production targets and the continued voluntary production cut from Saudi Arabia. EIA expects the decrease in oil supplies to push oil prices higher in 2024; the Brent crude oil spot price averages $95 per barrel in 2024, according to EIA's forecast. "We expect crude oil prices to rise in response to lower global oil inventories, although significant uncertainty persists around global demand for oil products," DeCarolis said.
- Electricity: EIA expects that natural gas will provide 42% of U.S. electricity generation in 2023, which is largely due to lower natural gas prices this year than in 2022, continued retirement of U.S. coal-fired electricity generators, and 5 gigawatts of high-efficiency natural gas-fired generators coming online this year. EIA expects the share of electricity generation from natural gas will decrease to 41% in 2024, which is still a greater share than in 2022.
- Renewables: EIA expects that renewables will continue to grow as a share of U.S. electricity generation in 2024, accounting for one-quarter of U.S. electricity generation next year. This growth is largely driven by significant increases in wind and solar electricity-generating capacity. "As coal provides less and less power to the grid, we expect the contributions of natural gas and renewables, in particular, to make up the difference," DeCarolis said.
The full October 2023 Short-Term Energy Outlook is available on the EIA website.
EIA Program Contact: Tim Hess, STEO@eia.gov
EIA Press Contact: Chris Higginbotham, EIAMedia@eia.gov
