Insights

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

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

Gas and Heating Oil Prices Rising Fast

Heading into the winter of 2021-2022, many energy forecasters were sounding alarm bells, predicting heating bills to rise significantly compared to prior years. For starters, the U.S. Energy Information Industry was anticipating colder temperatures than last winter, increasing demand for heating fuels to stay warm. This made for a poor combination with volatile and fast rising fuel prices.

Talmon Joseph Smith of the New York Times warned 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, where panelists inform on energy markets and expenditures for the upcoming winter. Below, we have broken down key points from the webinar.

Increasing Fossil Fuel Prices Across the Country

Natural Gas Heating 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 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 electric resistance and air 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 both heating and cooling—are increasingly becoming the preferred choice for new construction and replacement of aging systems. 

Interested in replacing your fossil fuel based heating system with modern, electric, Energy Star rated heat pumps? 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 strengthen as clean energy technologies scale and heat pump efficiency continues to improve.

Monthly utility bills will be lower for at least 104.7 million out of 121 million households, in every U.S. county, as a result of more efficient heat pump space heating and water heating units.

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 upgraded over 1,200 buildings to make them more comfortable and energy efficient. Complete our survey to see if your building is ideal for a heat pump system.

The Future of Fossil Fuel Prices 

The winter of 21/22 is more likely the new normal than an anomaly.

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 up to 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.