What Led to Lower Fuel and Propane Prices than Forecasted this Winter?
When the U.S. Energy Information Administration (EIA) released its Winter Fuels Outlook (WFO) in October 2022, it predicted an increase in both the average price of fuel and household consumption. Now that the heating season has ended (October to March), Harris Comfort is happy to announce the EIA has since reported that fuel consumption and pricing were both lower than initially forecasted in October.
Let's Take a Closer Look!
An unexpectedly warm winter, particularly in the Northeast, where most of the home heating oil is concentrated, led to a reduction in consumption. In their updated March WFO, the EIA forecast 4% fewer heating degree days for the United States in the 2022-2023 winter than its previous 10-winter (2012-2022) average and 10% fewer for the Northeast during that same period.
The reduction in consumption and demand as a result of the warmer weather led to an increase in distillate inventories in both Europe and the Northeast United States. From October 28 to December 30 (when distillate inventories typically increase), stock builds in the Northeast increased by 42% (6.0 million barrels) compared with the previous five-year average build of 10% (2.9 million barrels).
The warmer winter and increased distillate inventory helped contribute to a decrease in the price for both heating oil and propane. In October 2022, the EIA forecasted an average spending of $2,354 for household heating oil during the winter heating season. In reality, the average money spent on heating oil was $2,094, an average reduction of $260 or 11% from the initial forecast. In a similar trend, the EIA estimates that homeowners who use propane as their primary heating fuel will spend, on average, $1,476 this winter, a decrease of 12% from their original October forecast of $1,668.
While we are thrilled to report on these improved findings from the EIA, we understand that there is still a lot of work to be done. At Harris Comfort, we promise to keep looking for new ways to reduce the costs to heat your home. If you have any questions, please don't hesitate to contact us.