American families will pay far more to heat their homes this winter, according to the Energy Information Administration (EIA), which predicts that some people will see bills as much as 28 percent higher compared to last winter, with the grim outlook coming as households expect inflation to rise and the economy to get worse.
EIA said in its Oct. 13 winter fuels outlook (pdf) that it expects U.S. households to spend significantly more money on energy this winter, driven by a combination of higher retail energy prices and a slightly colder winter.
Compounding the problem are low inventories across a range of heating fuels, EIA said, which creates “the possibility for high price volatility and price spikes, particularly if this winter turns out to be very cold.”
Nearly half of U.S. households rely on natural gas for heat, with the average winter heating cost expected to rise to $931, which is 28 percent more than last year, EIA said. A colder winter, however, could mean 51 percent higher natural gas heating bills.
Electricity, which is more expensive than natural gas, is the main heating source for about 40 percent of homes. EIA’s base case estimate is for $1,359 per household this winter, up 10 percent from last winter. If the winter is colder, such households would pay 20 percent more.
Less than 12 million homes rely on heating oil or propane, or around 9 percent of households. Heating oil is poised to be the most expensive source of heat this winter, with EIA estimating that such households will pay 27 percent more than last winter, or a bill of $2,354. In a colder case, families relying on heating oil will pay 40 percent more.
Americans using propane to heat their homes are projected to pay 5 percent more than last year, or $1,668. A colder winter could send their propane heating costs up by 36 percent.
Commenting on EIA’s dire heating bill predictions was Kenny Polcari, Managing Partner at Kace Capital Advisors. He shared some of the stark numbers in a caustic tweet, saying “Good thing we passed that ‘Inflation Reduction Bill’ Expect the Biden’s and @DNC to demand a TAX on the oil companies to punish them for higher prices.”
President Joe Biden has accused oil companies of price gouging and has repeatedly used the bully pulpit to demand that gas stations bring down pump prices.
It comes as the latest data from the University of Michigan on Americans’ future inflation expectations show people think the pace of inflation will accelerate after several months of declines.
The University of Michigan Surveys of Consumers shows that the one-year ahead inflation expectations have gone up from 4.7 percent in August to 5.1 percent in September.
The longer-run inflation expectations, which have a five-year outlook, jumped from 2.7 percent to 2.9 percent.
“Last month, long run inflation expectations fell below the narrow 2.9-3.1 percent range for the first time since July 2021, but since then expectations have returned to that range at 2.9 percent,” Surveys of Consumers Director Joanne Hsu said in a statement.
“After 3 months of expecting minimal increases in gas prices in the year ahead, both short and longer run expectations rebounded in October,” she added.
Inflation, as measured by the Consumer Price Index (CPI) came in at 8.2 percent year-over-year in September, government data released on Oct. 13 showed.
Core inflation, which strips out the volatile categories of food and energy and is a measure of underlying inflationary pressures, rose to 6.6 percent, a 40-year high.
The University of Michigan survey also showed that Americans’ outlook on the economy worsened, dropping by 3.1 percent from the prior month.
“Continued uncertainty over the future trajectory of prices, economies, and financial markets around the world indicate a bumpy road ahead for consumers,” Hsu said.
Reporting from The Epoch Times.
