Why is My Heating Bill So High?
Why Is My Heating Bill So High?
You're not alone if you've noticed home heating prices creeping up this winter. Increased fuel prices, rising demand, and supply challenges have combined to substantially impact the cost of keeping your home comfortable.
Depending on your home heating system, climate, and personal preferences, you could be paying a lot more this winter!
Why Are Heating Bills Going Up?
It's a lesson straight from Economics 101. The price of any good will increase when:
- The demand for that product increases
- The supply for that product decreases
Fossil fuels like natural gas, coal, and other non-renewable energy sources account for roughly 80% of total energy consumption in the US. When the price of these fuels increases, Americans experience rising home heating costs, not to mention increased gas prices. So, why are heating costs rising?
In recent years, Americans have exhibited an increased demand for energy just as the global supply of fuels like natural gas has declined precipitously to reduce refinery capacity and conflict overseas.
Home Heating Costs Are Rising – Fast
The US Energy Information Association (EIA) publishes an overview of home heating costs every October. This outlines current trends in energy prices and predicts how much homeowners can expect to pay for the winter ahead.
The EIA itemizes its report based on the most common types of home heating energy sources.
Natural Gas Prices
For the winter of 2022-2023, the EIA expects homeowners with natural gas heat will pay roughly $930—a 28% increase over the previous heating season.
Global natural prices have quadrupled in the past two years due to increased demand for US natural gas, notably in Europe, where supplies have been cut drastically due to the Russia-Ukraine war.
Other contributing factors to rising natural gas prices include:
- Projected Increase of US demand due to colder temperatures
- Increased US natural gas production costs caused by post-COVID inflation and supply chain problems
- Natural disasters impacting production in natural gas production regions like Louisiana and Texas
Electricity Prices
US households heated by electricity have slightly reduced exposure to energy price increases—but not much. You can expect to spend 10% more on heating your home this winter, averaging roughly $1,360 per home. Electricity prices tend to be more resilient to energy price volatility because they rely on a mix of different fuel sources, including less volatile renewable energy. But natural gas prices have an outsized impact on electricity rates as it’s still the county's most common generator of electricity.
Electrification—the ongoing effort to transition away from fossil fuels in the electric grid—will further insulate electricity ratepayers from natural gas cost increases.
Other factors that impact your electric heating bill include:
- Your solution. For example, government-subsidized electric heat pumps and heat pump water heaters are much less expensive to operate than older-model electric furnaces and water heaters.
- The severity of winter weather in your region
- Your home's insulation efficiency
Related: Is Electric Heat Expensive?
Heating Oil Prices
Homes heated with heating oil will pay the most on average. Roughly 4% of Americans using heating oil will see a 25% increase in their heating bill, reaching an average seasonal expenditure totaling $2,350. Heating oil is the least-efficient heating fuel source, which makes it an excellent time to consider switching to a heat pump.
Your local One Hour Heating & Air Conditioning technician can help you choose and install the right heat pump system for your home and identify local utility and federal rebates and incentives for upgrading.
What You Can Do to Lower Your Heating Bill
No matter how you heat your home, prioritize energy efficiency during the heating season. Take time to inspect windows and doors for air leaks, close off your chimney when not in use, and explore other ways to reduce energy consumption. The Inflation Reduction Act of 2022 offers homeowners an array of tax credits and rebates for new insulation and home electrification projects.