Winter is here, which means those dreaded heating bills are on their way. Everyone is hoping we do not have a repeat of last year’s polar vortex, which busted the budget for many apartment dwellers and households. Well, based on the latest information from the National Oceanic and Atmospheric Administration (NOAA) and the US Energy Information Administration (EIA), it looks like our wishes are coming true. Despite a cold start to the winter in November, NOAA is predicting near-normal temperatures for the remainder of the winter. It will still be cold (because it is winter!), but nowhere near last year’s prolonged frigid temperatures. This means that more normal temperatures this winter will lower the demand for heating fuels at the same time we have lower crude oil prices.
The EIA is projecting that household heating oil expenditures will be 27% or $632 lower than last year since heating oil prices are now 20% lower. Those households heating with propane will pay 20% less in the Northeast and up to 34% less in the Midwest since propane prices are down 13% and 26% in those same regions, respectively. Natural gas prices are also down and are projected to be over 12% lower than last winter because of the lower heating demand and higher natural gas production this winter. The unusual cold spell that gripped the eastern half of the country last year strained natural gas supplies and the pipelines leading to the Northeast. Prices doubled and even tripled during that cold snap, but some additional capacity has been added recently which will help. Another added benefit is that these lower natural gas prices are expected to linger and reduce our electricity bills as we move into spring. Natural gas-fired power plants generate about 26% of the nation’s electricity, so lower natural gas prices means lower electricity costs, which in turn is passed on to consumers.
And if that wasn’t enough good news, the EPA says the average US household is expected spend about $550 less on gasoline in 2015 than in 2014. As you know, prices have come way down at the pump, so much that these are the lowest retail gas prices in 11 years. At the same time, our cars and trucks have go to the pump less often because they have become 20% more fuel-efficient since 2005. Since gas expenditures make up about 5% of total household expenditures, this is great news for your home budget.
Winter is here, but there is plenty of good news to keep us warm. So keep that thermostat setting down, throw on a sweater and an extra blanket and bank all those extra savings.
Happy New Year from the folks at Greystar Green.