EIA updates propane heating expenditures for 2017-18 winter

The U.S. Energy Information Administration (EIA) expects U.S. average household expenditures for heating oil and propane for the 2017-18 winter will be higher than last winter, according to the January Short-Term Energy Outlook.

Compared with last year, higher crude oil prices and lower inventory levels are putting upward pressure on the prices for heating fuels. In addition, forecasts for a colder winter than last year are expected to increase heating fuel consumption. As a result of increased prices and higher consumption, the EIA expects average household expenditures for heating oil and propane to increase from last year’s levels.

Temperatures this winter, based on the forecast of heating degree-days from the National Oceanic and Atmospheric Administration, are expected to be colder than last winter with about 10 percent more heating degree-days. Nevertheless, the EIA expects this winter to be slightly warmer than normal with 2 percent fewer heating degree-days than the 10-year average.

Increases in EIA’s projected household expenditures on propane vary by region.

EIA expects households in the Northeast (PADD 1) heating with propane will spend an average of $2,246 this winter, $256 (13 percent) more than last winter. These increased expenditures combine a 6 percent increase in consumption and a 7 percent increase in the fuel price, EIA says.

EIA expects households in the Midwest (PADD 2) heating with propane will spend $1,466 on average, $291 (25 percent) more than last winter. This reflects a 12 percent increase in both propane prices and consumption.

U.S. propane inventories at the beginning of October were 78.9 million barrels, 25 million barrels below inventories at the beginning of winter last year. As of Jan. 19, inventories were 54 million barrels, 14.2 million barrels below the same time last year.

The Midwest began this winter with inventories slightly below last year’s levels, according to EIA. Strong global demand for propane has provided export opportunities, and weekly U.S. exports of propane have exceeded last year’s volumes in 11 of the 15 weeks so far this winter.

Residential propane prices averaged almost $2.61 per gallon, over 2 cents per gallon more than last week and 25 cents per gallon higher than a year ago, the EIA reports. Wholesale propane prices averaged $1.28 per gallon, nearly 6 cents per gallon more than last week and almost 39 cents per gallon higher than last year’s price.

EIA says U.S. propane stocks decreased by 4 million barrels last week to 54 million barrels as of Jan. 19, 11.1 million barrels (17.1 percent) lower than the five-year average inventory level for this same time of year.