Insights

Natural Gas, Heating Oil and Propane Energy Bills Rising This Winter

Natural Gas, Heating Oil and Propane Energy Bills Rising This Winter

Winter is rapidly approaching. For some, the cold has already hit and heaters have turned on. According to the U.S. Energy Information Industry, this winter (October - March) is expected to be colder than last winter, increasing demand for heating fuels to stay warm. As the year has progressed, we have seen fuel prices sky rocket and inventories fall to record lows — all while the fossil fuel industry profits.  

Talmon Joseph Smith writes for the New York Times that “Several factors — lower global fuel inventories, incentives for producers to let prices rise and a mismatch between supply and demand as economies emerge from the pandemic — may combine to push bills higher regardless” of whether we face a severely cold winter. 

Around October every year, the National Association of State Energy Officials (NASEO) and U.S. Energy Information Administration (EIA) hosts a Winter Energy Outlook Webinar. Panelists from well-known industries use their expertise to inform on energy markets and expenditures for the upcoming winter. We have broken down the key points from the webinar.

Increasing Prices – All Fossil Fuels Across Every Region 

Natural Gas Heating is Expected to Cost 30% More Than Last Winter 

Nearly half the country is reliant on natural gas for heating their homes. These homes are mainly concentrated in states where winters require a significant amount of heating. For the winter of 2021-2022, the EIA is predicting there to be more heating degree days — a measure of heating demand — compared to last winter. However, predictions are never guaranteed. If it’s even 10% colder than expected, natural gas heating prices could soar, leaving homeowners to pay 50% or more of what they were paying last year. 

Usually, natural gas reserves build during the summer months, allowing ample supply for winter. However, due to a scorching hot 2021 summer, supply challenges associated with the COVID-19 pandemic, and last winter’s unexpected cold snaps in the South, natural gas reserves are at record lows. This unfortunate imbalance — demand for natural gas has grown more quickly than supply — leaving consumers to suffer the consequences of high energy costs. 

Oil Heating is Expected to Cost 43% More Than Last Winter 

4% of the country uses oil for heating. New York uses the most heating oil out of any state, coming in at 15% of the U.S. total. Last winter, residents paid an average of $1,210 for heating oil, but with low reserves and crude oil prices increasing daily, residents could be paying anywhere from $1,800 to nearly $2,000 in the 2021-2022 winter. 

With prices ballooning, consumers may wonder if now is the right time to consider a switch to an electric, heat pump based HVAC system. 

Propane Heating is Expected to Cost 54% More Than Last Winter 

Propane is a byproduct of natural gas. If natural gas prices are increasing, propane prices are too. 5% of the country uses propane for heating. Similar to crude oil and natural gas, reserves are at record lows, 21% below the 5-year average. High propane prices not only affect heating, but many other areas of use, including cooking, farming, manufacturing, etc. 

Experts report that the propane market is headed for “Armageddon,” leaving an estimated 6 million homes to reap the consequences of the reliance on fossil fuels. “Stockpiles of the key heating fuel and manufacturing feedstock in the world’s biggest economy probably have already topped out for the year and will be stretched as cold weather descends in coming weeks,” Edgar Ang, an IHS Markit analyst, said during a webcast presentation in October. 

“This season, heating costs could rise to levels not seen for a decade, even if there isn’t a severe winter.” - Talmon Joseph Smith, New York Times 

Electricity Bills Projected to Remain Steady

While homes using fossil fuels like natural gas (also known as fracked gas or methane gas), heating oil, or propane may see staggering increases in heating bills, homes using all-electric heating systems—most commonly air source heat pumps and ground source heat pumps—are projected to see a rise roughly inline with current inflation (6%). 

That’s great news for the 39% of households nationwide who use electricity for home heating. This number is expected to rise in the coming years, as air source heat pumps—which provide heating and cooling—are increasingly the popular choice for new construction and replacement of aging systems. 

Interested in replacing your fossil fuel based heating system with modern, electric heat pumps? See if an energy-efficient, all-season climate comfort system is right for you. Answer a few quick questions to see if your building is a good fit.

The Need for Electric Heating and Cooling

At a household level, building all-electric homes is cheaper than building fossil fuel homes, no matter the location. The average American household will save $362 on energy costs each year by going all-electric. These cost advantages will only get better as clean energy technologies continue to scale. BlocPower 

At least 85% of households in the United States — 103.0 million — could save $37.3 billion a year on energy costs if they were using modern, electrified furnaces and water heaters instead of their current fossil fuel based systems. 

It is proving to be costly, but fossil fuel based heating and cooling is also inefficient, dangerous for your health and will leave building owners facing fines in many jurisdictions as new laws and regulations come into effect. Modern heating and cooling with green HVAC technology is the answer to a smarter, healthier and more cost effective future. 

BlocPower has retrofitted and electrified over 1,200 buildings with modern heating and cooling systems, eliminating the increasing costs of fossil fuel based systems.

The Future of Fossil Fuel Prices 

Yes - this winter will be expensive. But it doesn’t end there. 

Current prices not only reflect a supply and demand issue, but a long-term problem knocking at our door. Natural gas, crude oil and propane prices for heating and cooling are expected to continue rising rapidly. Some 5-10 year projections put natural gas at an average of over $4/MMBtu by 2030. For context, that is nearly double what it is now. By 2050, prices are easily breaking $7:

The same is true for crude oil prices: 

Because propane is directly related to natural gas prices, heating and cooling prices for propane-based systems will continue to increase as well. 

Electric buildings and homes are the future. 

If you’re ready to save 30–60% on energy costs—and ensure dependable, healthy and clean heating and cooling for your building—BlocPower is ready to help you go fossil fuel free. Get started by answering a few quick questions about your building.