Residential natural gas prices are expected to be higher this winter.
Average household expenditures for all space-heating fuels are projected to be $1,137 this winter (October 1 to March 31), a 15-percent increase over the estimated $986 spent last winter, according to EIA’s Short-Term Energy and Winter Fuels Outlook released on October 7. The largest increases, 18 percent, will be in households using natural gas. About 52 percent of all households nationwide depend on natural gas as their primary heating fuel. The projected expenditure increases primarily reflect higher prices, although colder weather than last winter also is expected to contribute to higher fuel use in many areas.
Households heating primarily with natural gas are expected to spend an average of $155 (18 percent) more this winter compared with the 2007-2008 winter season. The increase in natural gas expenditures reflects the combined effects of a 17-percent increase in price and a 1-percent increase in consumption. Overall this winter, total residential consumption of natural gas in the United States is expected to increase by 3.5 percent year-over-year based on the projected 2.4-percent increase in heating degree-days. In addition to weather, worsening economic conditions add significant uncertainty to the forecast, particularly for the industrial sector.
The Henry Hub spot price averaged $7.88 per thousand cubic feet (Mcf) in September, $0.62 per Mcf below the average spot price in August. Despite hurricane damage to supply infrastructure in the Federal Gulf of Mexico, the recent decline in prices was the result of demand loss associated with these same hurricanes, moderate temperatures, lower oil prices, and uncertainties about future economic growth. On an annual basis, the Henry Hub spot price is expected to average about $9.67 per Mcf in 2008 and $8.17 per Mcf in 2009, compared with $7.17 per Mcf in 2007.
For more information, see the EIA 2008 Energy Conference: Winter Fuels Outlook Slideshow.
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EIA: Retail Prices
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