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Home heating outlook: staying warm this winter will be more expensive

In July, natural gas prices hit their highest level since 2014, according to the U.S. Energy Information Administration.

BUFFALO, N.Y. — Heating your home is probably the last thing on your mind this week with the sweltering heat and high humidity. For now, thoughts of cooler weather may soothe the soul, but in a few months ... well, we all know what's coming.

This winter, staying warm is expected to cost more than 2020, as the price of natural gas, propane, kerosene, and other home heating fuels return or surpass pre-pandemic levels.

In July, natural gas prices hit their highest level since 2014 according to the U.S. Energy Information Administration and that trend is expected to continue through winter. The administration expects natural gas, used for heating in home furnaces, will average $3.71/MMBtu through September and $3.42/MMBtu for all of 2021, which is up from the 2020 average of $2.03/MMBtu.

"Tighter U.S. natural gas supply and demand balances in recent months contributed to price increases. This summer, more natural gas exports—both those sent by pipeline and those sent as liquefied natural gas—have reduced the supply available for domestic consumption. Warm weather this summer has also increased natural gas consumption for electric power."

NYSERDA's home heating dashboard provides a better look for propane, heating oil, and kerosene which many more rural Western New Yorkers use to heat their homes. In July, the cost for a gallon of propane was around $2.94. 

That monthly cost was $0.60 cheaper last July 2020, a year before that it was $2.79, and long before the COVID pandemic, it was $2.88 per gallon.

2 On Your Side spoke to Jack Ampuja a Supply Chain Management Professor at Niagara University with over 30 years of experience about what this could mean for winter heating and why it's happening now?

"OPEC number one has really gone out to control supply, they're really doing a better job at controlling supply than they did a year ago," Ampuja said.

"Whether it's heating oil, kerosene, or propane, they all ride together so when one goes up they all go up because people can trade off one against the other for home heating."

Ampuja also explained why last year's prices were so low in comparison to recent history.

"Last year it was really a result of the fact that the economy. Because of COVID, there wasn't as much demand, and supply was OK, so prices came down," he said.

Forbes reported in early August that President Biden's shift away from fossil fuels and early executive orders restricting leasing and drilling for oil, which kerosene and heating oil are derived from, have also played a role. The new focus for the White House appears to be renewable energy.

For those looking to sign a propane contract to heat their homes this winter Bill Overbaugh, the Interim Executive Director for the New York Propane Gas Association recommends speaking with a local dealer about their pricing to avoid sticker shock.

"The most important thing I tell propane consumers is to talk to your propane supplier about fixed-price programs or capped rate programs to help make prices more predictable. Many dealers offer budget plans that can reduce your winter bills in half," Overbaugh said.

In added in a statement:

"When COVID hit in 2020, demand for a lot of fuels dried up (think about how much less driving we all did in May of last year). But that didn’t happen with propane. Instead, more people stayed home and kept the thermostats higher, they grilled outdoors, and when fall came, they invested in gas fireplace inserts and stoves. So propane demand actually increased.

Fast forward to 2021, and the result is lower propane inventories, which always drive prices up higher. Where they are going this winter is anyone’s guess, there are just too many variables: grain dryer demand, petrochemical demand, winter weather, geopolitical forces."

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