Consumers are going to spend a lot more this winter to heat their homes, according to a new U.S. government agency report this week. The outlook comes as most of the northeast is expected to see a colder-than-normal winter.
The exact cost increase is hard to measure. However, it will depend on the type of fuel being used to heat the home. Commodity prices and temperature swings will also play a big role.
The Energy Information Administration released their annual update, which showed rising costs of heating homes by natural gas. The EIA says the total cost could go up by 30%. The cost of propane is expected to spike by more than 50% too. Heating oil, another energy source to keep houses and families warm, will increase by 43%.
The winner in all of that? Households that are heated by electric. Those costs are expected to increase by just 6% this winter, according to the EIA.
Why are natural gas, propane, and heating oil prices going up at the same time?
Global demand has a lot to do with it. Natural gas prices are at their highest since 2014, according to a recent analysis, which found that overall global demand is skyrocketing coming out of the pandemic.
“The higher global and domestic energy prices that are resulting from economies beginning to grow again are going to translate into larger household bills for energy this winter,” EIA Acting Administrator Steve Nalley said in a statement.
To make matters worse, like nearly all other industries – the pandemic had a workforce effect on those trying to maintain supply levels so that a price spike wouldn’t occur.
How much will it actually cost to heat your home this winter?
As reported earlier there is still a lot of unknown. That said, households that paid $551 last winter to heat their home can expect to pay around $820 this time around. Meanwhile households that rely on propane could end up spending close to $2,000 by winter’s end to stay warm.