If gasoline prices are hurting American pocketbooks, home heating prices will cause similar concerns for households this winter. Energy prices are going up, fast. According to the Energy Information Administration’s Winter Fuels Outlook:

  • Nearly half of U.S. households that heat primarily with natural gas will spend 30 percent more than they spent last winter on average; 50 percent more if the winter is 10 percent colder-than-average and 22 percent more if the winter is 10 percent warmer-than-average.
  • The 41 percent of U.S. households that heat primarily with electricity will spend 6 percent more; 15 percent more in a colder winter and 4 percent more in a warmer winter.
  • The 5 percent of U.S. households that heat primarily with propane will spend 54 percent more; 94 percent more in a colder winter and 29 percent more in a warmer winter.
  • The 4 percent of U.S. households that heat primarily with heating oil will spend 43 percent more; 59 percent more in a colder winter and 30 percent more in a warmer winter.

Natural Gas

For natural gas, the average home-heating bill is expected to be $746 from October 1 to March 31, compared with about $573 during the same period last year. According to EIA, U.S. households will spend more on energy this winter than they have in several years. The agency attributed the higher heating bills to rising energy prices—natural-gas futures this year have reached a seven-year high—and the expectation of a more frigid winter than what most of the country experienced last winter.

EIA expects natural gas spot prices at the Henry Hub to average $5.67 per million Btu this winter, an 86 percent increase from last winter. Flat U.S. natural gas production and record-high levels of liquefied natural gas exports resulted in below-average storage levels and higher natural gas prices. Residential natural gas prices for homes that heat primarily with natural gas are expected to average $12.92 per thousand cubic feet, up from an average of $10.17 per thousand cubic feet last winter.

Heating Oil

For heating oil, Americans will spend $1,734 on average this winter, up 43 percent from last winter, due to higher retail heating oil prices that are expected to be 33 percent higher than last winter. The higher heating oil prices result from higher crude oil prices and higher refining margins than last winter. With expectations for a colder winter, EIA expects the average house that heats with oil to use 8 percent more fuel this winter compared to last winter. Customers in the Northeast rely on heating oil more than in any other region. About 18 percent of households in the Northeast use heating oil, down from 27 percent a decade ago. Many homes in the Northeast have switched to natural gas, if accessible, or electricity for home heating.

EIA expects retail heating oil prices to be 84 cents per gallon—33 percent higher than last winter. EIA’s forecast assumes that the Brent crude oil price will be $80 per barrel, or $1.90 per gallon this winter, which would be 65 cents per gallon (52 percent) higher than last winter. Heading into the winter last year, the average price of Brent crude oil in September 2020 was $41 per barrel. As of October 15, prices for Brent oil were $84.92 per barrel, more than double that.


For homes that heat with electricity, U.S. households will spend an average of $1,268 this winter on their electricity bills, which is 6 percent more than last winter. The increase is due to an expectation of a 1 percent increase in electricity consumption and a 5 increase in residential electricity prices. Forty-one percent of U.S. households heat with electric heat pumps or electric resistance heaters. Nearly two-thirds of homes in the South heat primarily with electricity. In the South, the forecast is for 7 percent higher winter electricity expenditures because of higher prices.

EIA expects U.S. residential retail electricity prices will average 13.8 cents per kilowatt hour this winter—5 percent higher than last winter—much higher than the year-over-year growth in nominal electricity prices during the past five winters, which has averaged about 1 percent each year.

The mix of fuels to generate electricity in the U.S. electric power sector this winter is different from last year as a result of changes in expected fuel costs and changes in available generating capacity. Due to higher natural gas prices, more coal will be used and less natural gas.

Europe’s Energy Crisis

An energy shortage similar to the one in Europe and Asia is not likely to occur in the United States this winter because the nation has significant natural gas storage capacity, is one of the largest natural-gas producers in the world, and has a diverse mix of electric generators, with significant amounts of coal and nuclear plants. But, the Biden administration could change that in the future with its goal for a carbon free generation sector by 2035. Similar to President Biden’s pursuit of renewable energy, European countries have been transitioning to intermittent wind and solar power that are not filling the gap during the energy shortage, and consequently have experienced skyrocketing energy prices.

Relatively weak natural-gas inventories, low wind levels, the post-pandemic economic recovery, coal shortages in China and the possibility of a cold Northern Hemisphere winter have sent fossil-fuel prices in Europe soaring. Benchmark European natural gas prices have risen 184 percent in the past three months. The shortage of natural gas, which is two to three times more expensive than the equivalent amount of oil in Europe, has utilities switching to more emissions-intensive fuels.

The high natural-gas and coal prices are pressuring power-generation companies and manufacturers to switch to oil, a trend that could add half a million barrels a day to global demand, according to the International Energy Agency (IEA). The IEA increased its global oil-demand forecasts for this year and the next by 170,000 and 210,000 barrels a day, respectively, indicating that the cumulative effect could be as large as 500,000 barrels a day from September through next year’s first quarter. That increase means that the IEA expects the demand for oil next year could exceed pre-pandemic levels at 99.6 million barrels a day.

Despite the increased production from OPEC+, the cartel is expected to produce 700,000 barrels a day less oil than the world’s demand in the fourth quarter of 2021, according to IEA. With President Biden’s actions against oil development in the United States and production in the United States running a million barrels per day behind 2019’s peak production, the cartel is well-positioned to profit from selling oil for decades to come. Further, they will also be able to control prices, so consumers can expect even higher prices to come.


Americans can expect significantly higher heating bills this winter due to higher energy prices and more consumption resulting from expectations for a colder winter. However, the United States is expected to be in better shape than Europe, where energy prices are soaring due to low stock piles of natural gas, limited natural gas supplies from Russia, low wind resources, competition from China for coal and LNG, and a limited electric capacity mix due to its transition to renewable fuels.

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