Why Are Home Heating Prices So High?
If you’ve noticed higher than expected energy prices recently, you’re not alone. While home heating oil prices can fluctuate dramatically, they’ve seen sizeable increases over the past several months. For homeowners looking for answers, many factors can drive prices up.
Types of Home Heating Fuel
There are plenty of different ways to heat your home but almost all of them require some kind of fossil fuel. In the United States, 48% of households use natural gas to meet their home heating needs. A further 5% of homes use home heating oil, which is a derivative of crude oil. Electricity from the utility company covers 40% of American homes. In just over half the country, 35 states to be exact, fossil fuels generated the majority of the energy used to generate electricity, despite the growing influence of renewables like wind and solar.
Natural Gas Pricing Variables
When the price of natural gas goes up or down, it impacts half the country’s ability to heat their homes. Many factors influence the price of natural gas. The most basic of those factors are:
- Natural gas production (extraction and processing)
- Amount of natural gas available in storage
- Variations in winter and summer weather
- Severe weather, particularly in import and processing centers in Texas and Louisiana
How Much Have Natural Gas Prices Increased?
In the winter of 2021-2022, experts predict a 30% increase in energy costs for homeowners heated by natural gas as compared to the previous year. That equates to an average cost of $746 to stay warm.
Why Are Home Heating Oil Prices So High?
Far fewer Americans heat their homes with heating oil, but they are also impacted by fluctuations in energy costs. The cost of crude oil, from which home heating oil is refined, is subject to many market forces, including:
- Political factors like embargoes or tariffs
- Weather events that affect refinement
- Shipping delays and other supply chain issues
- The price and viability of alternatives
How Much Have Home Heating Oil Prices Increased?
Home heating oil has seen an even larger increase since the winter of 2020-2021. The Energy Information Administration says home heating oil prices will see a 43% increase, largely due to what experts believe will be an exceptionally cold winter, which will increase demand. A similar fuel, propane, will see an increase of 54%.
The Cost of Electric Heating is Increasing, Too
Homes heated via electricity see much less severe price fluctuations, though they do tend to be slightly more expensive overall. Most utilities rely on coal to generate electricity, though some have adopted renewable energy sources as well. Households heating with electricity can expect to see a modest 6% increase, though the total will still be more than natural gas, with a national average of $1,268 to heat their homes this winter
When Are Home Heating Prices Expected to Go Down?
Demand for natural gas, home heating oil, and electricity will stay high throughout the winter months. Industry experts expected the price of crude oil to hit $100 per barrel in December 2021, with oil prices peaking in January 2022. Prices should slowly decrease through spring, though it may not be in time for homeowners to save money on heating costs.
How Can I Save Money on My Heating Bill?
No matter what kind of fuel you use, there are things you can do to improve energy efficiency and reduce your home heating costs. We have a dedicated library of resources on the topic of energy efficiency that can help homeowners reduce their home energy use.
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