U.S. Homes Could See 54 Percent Rise in Heating Costs, Especially for Propane, Natural Gas

Staying warm this winter in the country will come at a higher cost this year along with most other consumer expenses as heating oil, natural gas and other fuels surge in price.

The federal government said Wednesday that households will see their heating bills skyrocket as much as 54 percent compared to last winter—with the biggest increases due for homes that use propane, which accounts for roughly 5 percent of U.S. households.

Additionally, homes using natural gas, which is about half of all American households, could see bills above $740 this winter—a 30 percent spike from about the same time last year. That means this winter could be the most expensive since 2008-2009.

"After the beating that people have taken in the pandemic, it's like: What's next?" said Carol Hardison, chief executive officer at Crisis Assistance Ministry, which helps people in Charlotte, North Carolina, who are facing financial hardship.

For more reporting from The Associated Press, see below.

Fuel costs
DEATH VALLEY NATIONAL PARK, CALIFORNIA - JULY 11: Fuel prices posted at over USD 6.00 a gallon are displayed at the Furnace Creek Fuel gas station on July 11, 2021 in Death Valley National Park, California. An excessive heat warning was issued for much of the Southwest United States through Monday. Climate models almost unanimously predict that heat waves will become more intense and frequent as the planet continues to warm. David Becker/Getty Images

The second-most typical heating source for homes is electricity, making up 41 percent of the country, and those households could see a more modest 6 percent increase to $1,268. Homes using heating oil, which make up 4 percent of the country, could see a 43 percent increase — more than $500 — to $1,734.

This winter is forecast to be slightly colder across the country than last year. That means people will likely be burning even more fuel to keep warm, on top of paying more for each bit of it. If the winter ends up being even colder than forecast, heating bills could be higher than estimated, and vice-versa.

The forecast from the U.S. Energy Information Administration is the latest reminder of the higher inflation ripping across the global economy. Earlier Wednesday, the government released a separate report showing that prices were 5.4 percent higher for U.S. consumers in September than a year ago. That's the hottest inflation since 2008, as a reawakening economy and snarled supply chains push up prices for everything from cars to groceries.

The higher prices hit almost all households, with pay raises for most workers so far failing to keep up with inflation. Average hourly earnings for workers were up 4.6 percent last month from a year ago.

But higher heating bills will hit low-income households particularly hard.

She said households coming in for assistance recently have had unpaid bills that are roughly twice as big as they were before the pandemic. They're contending with more expensive housing costs, higher medical bills and sometimes a reduction in their hours worked.

"It's what we know about this pandemic: It's hit the same people that were already struggling with wages not keeping up with the cost of living," she said.

The biggest reason for this winter's higher heating bills is the recent surge in prices for energy commodities after they dropped to multi-year lows in 2020. Demand has simply been growing faster than production as the economy roars back to life following the shutdowns caused by the coronavirus.

Natural gas in the United States, for example, has climbed to its highest price since 2014 and is up roughly 90 percent over the last year. The wholesale price of heating oil, meanwhile, has more than doubled in the last 12 months.

Another reason for the rise is how global the market for fuels has become. In Europe, strong demand and limited supplies have sent natural gas prices up nearly 350 percent this year. That's pushing some of the natural gas produced in the United States to head for ships bound for other countries, adding upward pressure on domestic prices as well.

The amount of natural gas in storage inventories across the northern hemisphere is relatively low, according to Barclays analyst Amarpreet Singh, which means there is less of a cushion heading into winter heating season.

Heating oil prices, meanwhile, are tied closely to the price of crude oil, which has climbed more than 60 percent this year. Homes affected by those increases are primarily in the Northeast, where the percentage of homes using heating oil has dropped to 18 percent from 27 percent over the past decade.