On Wednesday, the U.S. government said households should expect a jump of up to 54% for heating compared to last year, as prices surge worldwide for heating oil, natural gas, and other fuels.
NEW YORK (AP) STAN CHOE —reports heating bills are set to soar as inflation hits energy prices.
Get ready to pay sharply higher bills for heating this winter, along with seemingly everything else.
Prices are surging worldwide for heating oil, natural gas, and other fuels; the U.S. government said it expects households to see their heating bills jump as much as 54% compared to last winter.
The sharpest increase likely will be seen in homes using propane, which accounts for 5% of households; however, others are likely to see a drastic increase.
Nearly half of all U.S. households that use natural gas could see an increase of 30% more than last year. This could mean this winter’s heating bills will compare to those from winter of 2008-2009.
The second-most used heating source for homes is electricity, up to 41% of the country, those are expected to see a modest increase of 6%. Homes using heating oil, roughly 4% of the houses, could see a 43% increase.
This year’s forecast is expected to be slightly colder than last year. People are likely to burn more fuel to keep warm, on top of paying more for it.
The U.S. Energy Information Administration forecast 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% 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.
Heating bills will hit the low-income households particularly hard.
“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.
Households requiring assistance for unpaid bills are roughly double than what they received before the pandemic, she said. People are contending with higher costs in housing, medical bills, and sometimes a reduction in 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 recent surge in energy commodities after dropping to multi-year lows in 2020 is blamed for the expanding heating bills. Simply, demand is growing faster than production as the economy roars back to life following the coronavirus shutdowns.
Natural gas in the United States, for example, has climbed to its highest price since 2014 and is up roughly 90% over the last year. The wholesale price of heating oil, meanwhile, has more than doubled over the previous 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% 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.
According to Barclays analyst Amarpreet Singh, the amount of natural gas in storage inventories across the northern hemisphere is relatively low, meaning less cushion heading into the winter heating season.
Meanwhile, heating oil prices are closely tied to crude oil prices, which have rocketed more than 60% this year.
AP Writer David Sharp contributed from Portland, Maine.