Prepare for Higher Home Energy Bills this Winter
The average cost of home heating is expected to rise 17.2% from last winter to $1,202, marking the second consecutive year of price increases and the highest prices in more than a decade, according to the National Energy Assistance Directors Association (NEADA).
But haven’t gasoline and oil prices fallen?
The gasoline index did shed 10.6% in August from July. That reflected a steady decline over the summer for a gallon of regular unleaded gasoline to $3.71, a level not seen since March. Oil prices are also down about a third from their June peaks that pushed gas prices just above $5 per gallon.
But as those prices fell, natural gas prices continued to climb as Russia cut its supply to Europe, creating frantic global demand.
Why could prices rise now?
First, the Fed’s daily releases from the strategic petroleum reserves (SPR) end next month, if the administration doesn’t extend it, which eliminates one supply source.
More importantly, on Dec. 5, the Group of Seven industrialized nations of Japan, the U.S., UK, Canada, Germany, France and Italy plan to cap Russian oil prices.
“If they do, Russia says it’s cutting everything – oil and natural gas exports – off. Should that happens, “oil prices will retest the highs set in June and cause the average price of regular gas to move well back above the current $3.70 per gallon.”
And likely, natural gas prices would surge again too.
Europeans will have it far worse than Americans because they rely on Russian natural gas. Russia’s already closed two major pipelines to Europe. That has sent prices up 300% from last year to the highest levels since 2008.
But Americans also are feeling pain. The U.S. has sent record liquefied natural gas (LNG) exports to Europe to help it boost supplies before winter. But now, as prices climb, the U.S. finds its stockpiles low.
“We appreciate that the Biden Administration has been working with European allies to expand fuel exports to Europe,” six New England governors wrote in a letter to Energy Secretary Jennifer Granholm in July. “A similar effort should be made for New England,” the only U.S. region that imports LNG because it doesn’t have ready access to U.S. LNG.
East Coast diesel, and gasoline inventories also linger near record seasonal lows.