Posted on 10/07/2014 7:53:22 AM PDT by thackney
The average household winter heating fuel expenditures discussed in this STEO provide a broad guide to changes compared with last winter. However, fuel expenditures for individual households are highly dependent on local weather conditions, market size, the size and energy efficiency of individual homes and their heating equipment, and thermostat settings (see Winter Fuels Outlook table). Forecast temperatures based on the latest forecasts from the National Oceanic and Atmospheric Administration (NOAA) are much warmer than last winter east of the Rocky Mountains, with the Midwest 16% warmer, the South 12% warmer, the Northeast 11% warmer. However, last winter provides a reminder that weather can be unpredictable, and the Winter Fuels Outlook includes forecasts for scenarios where heating degree days (HDD) in all regions may be 10% higher (colder) or 10% lower (warmer) than forecast.
Natural Gas
About half of all U.S. households heat with natural gas, and the average household may expect a 5% decrease in winter natural gas expenditures. EIA projects a 10% decline in residential natural gas consumption this year as temperatures are expected to return to closer-to-normal levels. The savings from lower consumption are partially offset by higher residential prices. Although EIA forecasts lower Henry Hub prices this winter, current spot prices do not directly translate into lower delivered residential prices. Utilities began buying gas in April for the upcoming heating season, and prices in 2014 have averaged higher than last year. Plus, the rates that utilities charge can be set by state utility commissions a year or more in advance.
Under a 10%-colder scenario, EIA projects consumption will be 3% less than last year and expenditures will be 6% greater than last year. Under a 10%-warmer scenario, EIA expects a decline of 17% in consumption and 12% in expenditures compared with last year.
Last winter, gas-fired power plants in the Northeast had to compete for an increasingly limited amount of available natural gas pipeline capacity from a system that was already constrained, particularly in New England and New York. This caused natural gas spot prices and consequently day-ahead power prices to spike. Pipeline constraints still exist in the area, and day-to-day price volatility is likely. The region has two important marginal sources of supply for times of very high demand: liquefied natural gas (LNG) imports and pipeline imports from Canada. Although LNG imports have declined dramatically in the past several years, GDF Suez still receives cargoes from Trinidad under long-term contracts at its LNG terminal near Boston. One of the terminal's customers is the adjacent Mystic Power Plant. LNG received at the Canaport LNG terminal in New Brunswick, Nova Scotia, also comes to the United States via the Brunswick Pipeline.
Strong production growth this year contributed to a record inventory build. EIA projects working natural gas inventories of 3,532 billion cubic feet (Bcf) at the end of October. EIA expects working gas inventories to be drawn down to 1,534 Bcf at the end of March 2015. Even in the event of another cold winter, EIA does not expect stocks to fall below 1,000 Bcf by the end of this heating season.
Heating Oil
EIA expects households heating primarily with heating oil to spend an average of $362 (15%) less this winter than last winter, reflecting prices that are $0.25/gal (6%) lower and consumption that is 10% lower. Heating oil prices are expected to be lower in large part because of lower crude oil prices, with Brent crude oil prices forecast to average $9/bbl ($0.22/gal) lower this winter than last. In the 10%-colder-weather scenario, projected expenditures are $124 lower than last winter, with prices that are $0.16/gal lower than last winter.
A number of factors contribute to uncertainty in this winter's heating oil market, including weather and oil price volatility, the adequacy of inventories, and changes in fuel specifications. Distillate stocks in the Northeast totaled 29.3 million barrels on September 26, 0.2 million barrels below the same time last year and the lowest level for this time of year since 2000. However, unless severe weather in the Northeast coincides with severe weather in Europe, demand should be readily met via supplies from the Atlantic Basin market.
Reliance on heating oil is highest in the Northeast, where about 23% of households depend on heating oil for space heating. Nationwide, only 5% of households use heating oil. The state of New York, which accounts for about one-third of the region's heating oil market, has required the use of ultra-low sulfur heating oil since July 2012. Five states (Connecticut, Massachusetts, New Jersey, Rhode Island, and Vermont) lowered their heating oil maximum sulfur specification on July 1 from 2,000 parts per million (ppm) (and higher) to 500 ppm. No major impact is expected as suppliers will either blend high-sulfur distillate with ultra-low sulfur diesel (ULSD) or deliver ULSD, which is a readily available fuel.
In January 2015, new regulations will limit marine vessel fuel sulfur levels in certain coastal waters to 1,000 ppm. Some vessels are expected to switch from using residual fuel oil to distillate because of its lower sulfur content. However, the effect on the Northeast heating oil market should be limited because marine fuel demand in this region is relatively small.
Propane
About 5% of all U.S. households heat with propane. EIA expects households heating primarily with propane to spend less this winter, but the projected decrease varies across regions. EIA expects that households heating with propane in the Midwest will spend an average of $767 (34%) less this winter than last winter, reflecting prices that are about 24% lower and consumption that is 13% lower than last winter. Households in the Northeast are expected to spend an average of $340 (13%) less this winter, with average prices that are about 5% lower and consumption that is 9% lower than last winter.
Heading into the winter months, primary propane stocks in the Gulf Coast (PADD 3) and the Midwest (PADD 2) at the end of September were 6.6 million barrels (18%) and 3.7 million barrels (15%) higher, respectively, than at the same time last year. Propane spot prices at the Mont Belvieu, Texas and Conway, Kansas delivery points in early October were close to prices at the same time last year. The outlook for propane demand is uncertain given volatility in winter temperatures and another expected record corn crop, which could draw down propane stocks for crop drying. The Cochin Pipeline, which previously delivered propane from Canada to the Midwest, was reversed in early 2014. While this reversal will limit the ability to deliver propane into the region, higher propane production from gas plants in the Midwest and new and expanded rail terminals should help to supply propane to the region this winter.
Electricity
Households heating primarily with electricity can expect to spend an average of $17 (2%) less this winter, with 3% higher prices but 5% less consumption than last winter. About 39% of all U.S. households rely on electricity as their primary heating source, ranging regionally from 15% in the Northeast to 63% in the South.
Under a 10% colder scenario, EIA estimates that U.S. residential electricity consumption this winter would be 1.8% higher than during the winter of 2013-14. Residential electricity prices would not rise immediately, but the effect of colder temperatures would pass through to retail electricity rates over the succeeding months of 2015. For a 10% colder scenario, the average U.S. residential price would rise by 2.7% in 2015 in contrast to the baseline forecast of 1.7% growth. The effect would be greatest in New England where residential prices would rise by 6.0% next year if there's a cold winter, in contrast to the baseline forecast of a 3.6% increase.
Wholesale electricity prices in the Northeast region spiked last winter because of a winter freeze and constraints on supplying natural gas to power generators. As a result, retail electricity customers in that area have experienced increases averaging up to 12% so far this year. The natural gas pipeline constraints in New England still exist and deliveries into the region are near capacity. If colder-than-expected temperatures occur this winter, there is the possibility that wholesale electricity prices could rise again. Electricity traders are already factoring in this uncertainty through higher forward market prices for wholesale electricity in the Northeast Independent System Operators.
Wood
The use of cord wood and wood pellets as the primary residential space heating fuel has increased by 38% since 2004, to about 2.5 million households in 2013. About 8% of households use wood as a secondary source of heat, making wood second only to electricity as a supplemental heating fuel. About 20% of New England homes (1.1 million) used wood for space heating, water heating, or cooking in 2009 (EIA, Residential Energy Consumption Survey, 2009), which is nearly twice the national rate. Almost half of all rural households in New England used wood, compared with only 12% of the area's urban households.
Table above includes comparison to previous winters back to 07/08
Also included is volumes (based upon expected weather this winter). So it has a price per unit consumed, as well as expected total consumption and associated price.
Note: Winter covers the period October 1 through March 31. Fuel prices are nominal prices. Fuel consumption per household is based only on households that use that fuel as the primary space-heating fuel. Included in fuel consumption is consumption for water heating, appliances, and lighting (electricity). Per-household consumption based on an average of EIA 2005 and 2009 Residential Energy Consumption Surveys corrected for actual and projected heating degree days. Number of households using heating oil includes kerosene.
My condo has electric heat.It’s been announced that electricity rates in my area are gonna be 37% higher this winter than last because of a shortage of natural gas.
Drive 70, freeze a Yankee.
electricity rates in my area are gonna be 37% higher this winter than last because of a shortage of natural gas of pipelines. They have been held up by protests by the NIMBYs and environMENTALists in my state.
If you look at their raw numbers they are predicting a warmer winter than all but one of the last seven years for the Midwest. Other predictions I've seen have been for colder than average but not as brutal as last year.
See post #3.
Hey,thanks...love you too!
In locations where the temperature dips below freezing, energy use is expected to rise. Scientists have noticed a cycle occurring approximately every 12 months, when January temps can reach single digits.
Scientists have not yet been able to explain why the use of natural gas and heating oil takes a sharp dip in the summer months. Climate change appears to be a factor.
“Necessarily skyrocket” bump
My prediction and that of others is for a cold wet (snow) winter.
The cool wet summer will just be extended and the troughs already present will continue to dump the cold air
The temperature maps will look like blue tongues extending southward out of Canada
I will miss my wood stove
If you haven’t seen this, there are quite a few projects trying to get approval to bring more natural gas into New England.
http://www.freerepublic.com/focus/f-news/3204624/posts?page=2#2
I have some good news and some bad news for you.
The bad news first.
Space aliens have landed in NY.
Now for the good news.
They eat illegal aliens, piss gasoline, and they’re headed south.
Hmmmm what to think... Hmmmm....
I am with you , and Joe Bastardi/Weatherbell.com as he is not just a weatherman , but also a climatologist.
Bastardi is calling for a repeat of last winter with colder temps and more snow west of the Appalachians,from Penna. to Alabama.
Last Saturday's report he told why this would be so, and his co-analyist has a "Golden Book" of previous years weather since history repeats itself.
Yes , there will be 'Polar Vortex', several in fact, comming out of Canada and sweeping down east of the Rockies, and Bastardi tells why it is going to happen.
I am reminded that Zero uses the 'All Governement In' approach to further his agenda; NOAA and EPA are govt. agencies.
Don't forget that the EPA wants to close down coalfired generators this winter, I believe by January 15, 2015.
I think the current NOAA forecast and the EPA are part of the 'All Government In' to further the adminstrations agenda; and this govt. isn't known for its honesty.
My money is on Bastardi's analysis ; regardless, we will know for sure this Spring/2015.
When Bastardi and the Old Farmers Almanac both say that this winter is going to be severe, I believe their analysis is correct.
When NOAA says it will be milder,and when combined with the EPA's 'war on coal', I can only think that Global Warming will only impact Al Gore's wallet.
It's not like the NOAA has jiggled the figures and statistics in the past; and the EPA wont even tell Congress how it conjures up the data to close coalfired plants.
I will now go look for my 'tin-foil' hat.
Residential heating has a higher priority for gas deliver versus an electrical generating utility. Any gas available on a spot market is bid up.
The coal fired component is phasing out of service, and excess Canadian hydro needs more interconnects. Along comes a colder winter !!!
Can you say rolling blackout as the silver lining compared to dropping the grid for a week?
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