Energy costs for US households will increase sharply, following a worldwide trend of rising prices of energy. While the US has not experienced such dramatic spikes in natural gas prices, as winter looms, costs for residents might see a peak in the coming months, according to the Energy Information Administration.
Firstly, there’s an energy crisis in Europe due to dramatic increases in energy costs; especially natural gas, oil, and coal. Various factors are contributing to the crisis; however, Russia booking only a third of its capacity pipeline network for October; insatiable demand from Asia as the pandemic eases and tight supplies from top producers are the principal.
About the matter, EIA Acting Administrator Steve Nalley said in a release. “As we have moved beyond what we expect to be the deepest part of the pandemic-related economic downturn, growth in energy demand has generally outpaced supply growth. These dynamics are raising energy prices around the world.”
Consequently, US households will experience an increase in costs. However, the spike would be more or less dramatic, depending on the type of energy used to create heat. According to the EIA, nearly half of US households rely on natural gas for heat. The average increase expected for those is 30% to $746 for the October-to-March period from the same time a year earlier.
Moreover, the average cost for a home with natural gas last winter was $573; despite the increase, natural gas in the US is still far cheaper than other major sources of heat. Indeed, natural gas prices have risen sharply in recent months due to shortages in places like China and Europe, where demand has rebounded from the pandemic.
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The energy coming from propane or heating oil to rise sharper
Furthermore, the United States is a major exporter of liquified natural gas; however, it can only export a small portion of its production due to limited terminal space capacity.
On the other hand, around 40% of households in the US rely on electricity for heat. Substantially more expensive than natural gas at an estimated $1,268 per household this coming winter. However, the increase for this period will only be around 6% compared to last winter.
In addition, less than 12 million American households rely on heating oil or propane; those will see the biggest hit. Costs of propane and heating oil will rise by 54% and 43%, respectively, the EIA said.
Finally, the EIA noted that depending on where people live, residential costs will rise to about $11-$14 per thousand cubic feet (mcf) for natural gas, about $2.50-$3.50 per gallon for propane, and $3.39 per gallon for heating oil.
