Prepare to pay much higher heating costs, as well as apparently everything else, this winter.
Due to rising global costs for heating oil, natural gas, and other fuels, the US government stated Wednesday that heating expenses might increase by up to 54 percent this winter compared to last.
Natural gas is used to heat nearly half of all households in the United States, and they might pay an average of $746 this winter, up 30% from a year earlier. The Midwest might be hit especially hard, with prices expected to rise by 49 percent, making this the most costly winter for natural-gas-heated households since 2008-2009.
Electricity is the country’s second-most-used heating source, accounting for 41% of all houses, and those families might see a relatively moderate 6% hike to $1,268. Heating oil users, who account for 4% of the country’s population, may see their costs rise by 43%, or more than $500, to $1,734. The most significant increases are anticipated to be seen in homes that use propane, which account for 5% of all households in the United States.
This winter is expected to be somewhat cooler than previous year across the country. As a result, individuals will likely consume more fuel to stay warm, while also paying more for each unit. Heating expenses may be greater than expected if the winter turns out to be considerably colder than predicted, and vice versa.
The latest warning of rising inflation ripping through the global economy comes from the US Energy Information Administration’s projection. A separate government data issued earlier Wednesday showed that consumer prices in September were 5.4 percent higher than a year ago. As a resurgent economy and clogged supply chains drive up costs for everything from autos to groceries, this is the highest inflation rate since 2008.
The rising costs impacted everyone, with most workers’ wages not keeping pace with inflation thus far. However, they disproportionately affect low-income families.
“After the devastation that the epidemic has caused, it’s like, ‘What’s next?'” Carol Hardison, CEO of Crisis Assistance Ministry, a Charlotte, North Carolina-based organization that assists persons in financial need.
Households seeking assistance lately had outstanding bills that were about twice as large as they were before to the epidemic, she added. They’re dealing with greater housing costs, more medical expenditures, and, in some cases, a reduction in their working hours.
“It’s what we know about this pandemic: It’s affected the same individuals who were already struggling because their earnings weren’t keeping up with the cost of living,” she explained.
Families are making corners to make ends meet. According to a September study by the US Census Bureau, over 22% of Americans had to cut down or skip essential needs like medication or food in order to pay an energy bill in the last 12 months.
“This will put folks in the poorest third of the country in a lot of trouble,” said Mark Wolfe, executive director of the National Energy Assistance Directors’ Association. “You may urge them to save money and turn down the heat at night, but many low-income families already do that.” They were already unable to purchase energy.”
Many of those households are just coming out of a scorching summer with hefty air-conditioning expenses.
Energy assistance programs for low-income homes are funded by Congress, but its directors are seeing their purchasing power dwindle as fuel prices rise, according to Wolfe.
The recent increase in energy commodity costs after they fell to multi-year lows in 2020 is the main cause for this winter’s higher heating expenditures. As the economy roars back to life following the coronavirus shutdowns, demand has simply outpaced output.
Natural gas prices in the United States, for example, have risen by over 90% in the previous year to their highest level since 2014. Meanwhile, the wholesale price of heating oil has more than quadrupled in the last year.
Another factor contributing to the increase is the globalization of the fuels market. Natural gas prices have risen more than 350 percent in Europe this year due to strong demand and limited supplies. As a result, some natural gas generated in the US is being diverted to ships headed for foreign nations, putting increasing pressure on local prices.
According to Barclays analyst Amarpreet Singh, the amount of natural gas in storage stockpiles is quite modest. As a result, there is less of a buffer going into the winter heating season.
Meanwhile, the price of heating oil is strongly linked to the price of crude oil, which has increased by more than 60% this year. The households most affected by the price hikes are in the Northeast, where the share of homes using heating oil has decreased from 27 percent to 18 percent in the last decade.
