Propane household expenditures to hold steady this winter

Higher consumption and lower prices this winter will lead households heating primarily with propane to pay about the same amount as they did last winter on average across the United States, according to the U.S. Energy Information Administration’s (EIA) Winter Fuels Outlook.

In the outlook, U.S. average expenditures for households heating primarily with propane will total about $1,190 this winter.

Out of the three U.S. regions for which EIA tracks propane household expenditures, the Midwest is forecast to see the greatest increase at 2 percent compared to last winter. That equates to winter expenditures for those households of about $1,230.

EIA says the increase in spending by Midwest homes is driven by an 11 percent increase in consumption – consistent across all sectors – because of a return to more normal temperatures this winter after the mild winter last year. However, the increase in consumption in the Midwest will be offset by an 8 percent decrease in retail propane prices compared to last winter.

The EIA is expecting the retail propane spot price to average $2.40 per gallon throughout the winter – 5 percent less than the previous winter. It notes how the Midwest often has lower retail prices than other regions and will average $1.89 per gallon this winter.

The Northeast and South won’t see much change in propane household expenditures compared to last winter, the EIA says, as increases in consumption again will be offset by lower prices. Households in the Northeast will pay 1 percent more in winter heating expenditures compared to last winter, totaling about $1,675, while those in the South will pay 2 percent less, totaling about $1,130.

Propane household expenditure forecasts this winter will change depending on different temperature scenarios, according to the EIA. In the colder scenario, it forecasts a 19 percent increase in propane household expenditures in the Midwest, a 13 percent increase in the Northeast, a 7 percent increase in the South and a 13 percent increase overall for the United States. In the warmer case, the EIA forecasts homes in all regions, and across the United States as a whole, would spend about 8 percent less than the previous winter.

The EIA is forecasting U.S. propane inventories to remain well above their previous five-year average throughout the winter. Inventories reached an all-time high of 103 million barrels for the week ending Oct. 11.

Read the Winter Fuels Outlook.

Featured homepage photo by LP Gas staff