Households should see cheaper heating bills this winter

October 7, 2014, 6:18 PM UTC
contract armin harris
Kyle Bean for Fortune

After enduring a brutally cold winter last year, American households should catch a break this season — and that’s good news for their pocketbooks.

The U.S. Energy Information Administration, in its short-term energy and winter fuels outlook, released Tuesday, projects that homes across the board will see a cheaper heating bills this winter, led by a drop of as much as 34% for homes using propane. The EIA expects a 15-percent decline in the cost of home heating oil, about 5 percent for natural gas and 2 percent for electricity.

The biggest winners will be households in the Midwest that were slammed last winter by frigid conditions and tight supplies of propane. Already, the EIA is projecting that inventories in September were about 15% higher than last year.

“Midwest households that paid extremely high prices for propane last winter will see the biggest drop in their heating bills, which on average should be almost $800 less for the season,” U.S. Energy Information Administration Administrator Adam Sieminski said.

The cheaper bills are due in large part to forecast of a warmer winter, with the National Oceanic and Atmospheric Administration projecting temperatures as much as 16 percent higher than average in many parts of the country. Among the regions expected to be warmer: the Southwest, the South-Central U.S., parts of the Southeast, New England and western Alaska.

Other forces driving down bills include declining energy prices, especially for home heating oil. With prices for crude oil dipping below $90 a barrel last week, oil is now at its lowest level since 2012, partly due to slower-than-expected growth in Europe and China. Energy prices are also lower due to a surge in production from the shale boom in the United States.