According to the United States Energy Information Administration, U.S. households are expected to spend more money on energy this winter than last winter, especially households that primarily heat with propane or heating oil. The forecast is based on expectations of high retail energy prices—many are already at multiyear highs—and of slightly more energy consumption per household than in the previous winter. Many energy prices reached multiyear lows last year as a result of the COVID-19 pandemic.
The released forecast focuses on retail energy markets for the four most common heating fuels in the United States and forecasts energy expenditures from October through March for residential households, in particular, according to the EIA.
“Our forecast is based in part on information from our Residential Energy Consumption Survey, and we categorize household consumption and expenditures based on primary heating fuels. However, the forecast expenditures reflect consumption across all energy uses, not just heating.”
The EIA states that retail energy prices for several fuels are already at their highest point in several years and explains why.
“Although price increases over the past year can be attributed to several factors, the main reason wholesale prices of natural gas, crude oil, and petroleum products have risen is that fuel demand has increased from recent lows faster than supply, in part, because of economic recovery after the first year of the COVID-19 pandemic. To varying degrees, these increases in wholesale prices are being passed through to consumers.”
When forecasting expenditures, EIA assumes the consumer’s cost for the fuel is the retail price at the time they use the fuel rather than the actual purchase price.