That chill in the air is a sure sign that winter is approaching. The good news is the cost of staying warm this winter should be significantly less than last heating season. The economic recession has weakened industrial demand for oil and natural gas and that, in turn, has sent prices tumbling for most heating fuels. The Energy Information Administration (EIA) reports Nebraska customers could expect to pay about 22 percent less for natural gas to heat their homes this fall and winter compared with last year. Electric heating costs are expected to fall three percent, propane heating costs are expected to fall 19 percent, and home heating oil costs are projected to increase ten percent in Nebraska. Last year at this time, there was disbelief over the high cost of winter fuels. But after a steep slide in oil prices, this year is looking better. Heating costs during this winter are expected to be less expensive for Nebraskans than they were a year ago, thanks to a glut of natural gas and distillate fuels and a recession that's pushing down demand.
Winter Temperatures
The big driver in winter heating costs is the weather. The Energy Information Administration uses winter temperature projections produced by the National Oceanic Atmospheric Administration (NOAA). NOAA's most recent forecast of heating degree days shows that Nebraska will be 1 percent warmer this winter compared to last winter and 1 percent warmer than the 30-year average (1971-2000).
Natural Gas
Natural gas, which heats seven out of every ten homes in Nebraska, a 22-percent decrease in expenditures is expected to result from a 19-percent price drop and a four-percent consumption decline due to a forecast of slightly warmer weather this winter. Projected Henry Hub spot prices remain highly volatile despite the expectation that natural gas storage will remain above historical levels throughout this winter.
Electricity
In Nebraska, where two out of every ten homes rely on electricity for heating, a three-percent decrease in expenditures is projected from a one-percent decrease in price and a three-percent consumption decline. Projected expenditures show little change from last year.
Propane
Nebraska households using propane are seen spending an average 19 percent less than a year ago. The decrease reflects a 16-percent price drop and a four-percent decrease in consumption. One out of every ten homes depend on propane as their primary heating fuel. Although propane inventory levels are high, there is concern that lower natural gas production and cold winter weather could lower inventory levels.
Heating Oil
Households relying on heating oil for heating can expect to pay an average of ten percent more this year compared to last winter due to a 15-percent increase in the average price. Crude oil prices directly impact heating oil prices. Although crude oil prices are expected to remain near current levels, they also remain highly volatile. Distillate inventory levels, which includes heating oil, are well above the five-year average. These households represent one out of every 100 homes in Nebraska. |
