Heating your home this winter likely won’t burn quite as big a hole in your wallet as initially forecast.
Both the US Energy Information Administration and the National Energy Assistance Directors Association this month lowered their cost estimates for heating with natural gas and oil. That’s thanks to a combination of lower energy prices and a milder-than-expected winter.
That’s the good news.
The bad news is that it will still cost way more to keep warm than it did last winter. That’s driving a surge in the number of people applying for federal heating assistance — but not everyone will be able to get the help they need, as there’s less federal funding to distribute this year.
Home heating this winter will cost an average of $1,162 across all fuel types, according to EIA’s January projection of total average costs for the season. That’s down $46 from the agency’s October forecast.
The change, however, varies widely by fuel. Those who heat with natural gas will pay an estimated $828 over the course of the winter, down $103 from the initial forecast.
Heating with oil will cost an estimated $2,342 for the season, down $12 from the October forecast. But that’s actually a bigger decrease than it seems because the EIA hiked its projection by several hundred dollars in November amid a spike in oil prices that has since receded.
Those with electric heat will pay about the same amount, roughly $1,360, while those who heat with propane will pay an estimated $1,727, up $59 from the earlier projection.
Still, costs are up across the board compared to last winter — nearly 26% and 14.5% for heating oil and natural gas, respectively, and 10.5% and nearly 9% for electricity and propane, respectively.
“You’re still paying more, but not as much more,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association. “If the warming trend continues, then it will be cheaper because you just don’t need to use as much fuel.”
Challenges for small businesses and customers alike
All the price fluctuations have made for a tough winter for home heating oil delivery companies, which are usually small, multi-generational family businesses.
They have had to work with their banks to increase their lines of credit to purchase inventory and with their customers to put them on budget plans so they can better afford deliveries.
More people have had to go on budget plans this year, and they are taking longer to pay their bills, said Sean Cota, CEO of the National Energy & Fuels Institute, a trade association for independent oil heat, propane, biofuel and motor fuel dealers and associated companies.
“For the retail industry, it probably was and continues to be the most challenging year in our history,” Cota said of the “crazy differences” in prices each month. “The only good part has been that it’s been warm because of the tight supply — which is also bad for us, right? Because we need to sell stuff to stay in business.”
For Jason Bell, the milder winter — plus a move to a rental house that heats with natural gas instead of electricity — has meant that he and his husband, Shane, can save more money to buy their own home.
So far, they received a monthly bill of about $130 for electricity and $236 for natural gas. That compares to the roughly $470 monthly budget plan they were on in their old place, which also cost $200 more a month in rent.
The savings, as well as the general decline in inflation in recent months, means that Bell can drop one of his two full-time jobs later this year.
“We were hoping that in conjunction with the warmer temperatures and us turning the thermostat down at night that the heating bill would be a lot less,” said Bell, who is a police officer in a nearby borough and a state dog warden. “It offers a lot more breathing room.”
Despite the estimated dip in costs, many Americans are in need of help. Applications for the Low Income Home Energy Assistance Program are projected to reach their highest level in more a decade, Wolfe said.
Already, it’s up by as many as 1.3 million applications, the largest one-year increase since 2009. That’s on top of last year’s estimated 4.9 million beneficiaries.
To help its residents cope with the high heating costs, Maine started sending $450 energy relief payments on Monday. An estimated 880,000 people will receive the assistance, which will be sent to individuals with incomes below $100,000 and couples filing joint returns making twice that. Each spouse will get the $450 payment.
In Connecticut, applications have jumped 23% so far this season, which started in September, said Peter Hadler, the state’s LIHEAP director. That’s on top of a 27% increase over the same period a year ago.
He said his staff is hearing from people dealing with multiple financial challenges, including higher prices for energy and food and the elimination of pandemic supplements, such as the enhanced child tax credit and three rounds of stimulus checks.
The agency itself is contending with a triple whammy: more applications, higher fuel costs and less federal funding. Last January, it paid around $3.15 a gallon for oil for fuel delivery. Now, it’s around $4.10 a gallon, though at least that’s down from the roughly $5.70 a gallon in November.
Hadler expects to receive $118.5 million in federal LIHEAP funds for fiscal year 2023, down from $140.5 million the prior fiscal year, when Congress poured billions more into the federal program through the American Rescue Plan Act.
Last season, the federal appropriation for LIHEAP totaled a record of about $8.4 billion, while this fiscal year, it’s about $6.1 billion.
If the federal funds run out, the state has promised to pitch in $30 million.
Still, Connecticut has had to reduce the amount of assistance it can grant each household.
For instance, last year the lowest-income vulnerable families — who had senior citizens, young children or disabled members — could receive up to $4,825 in fuel deliveries. This season, they can get only a maximum of $2,320.
“We’re hearing from seniors and other applicants concerned about their ability to heat their homes,” Hadler said. “They’re keenly aware of the decline in benefits compared to last year. It’s small comfort for them to know that it is due to less federal funding. The bottom line is the benefits are smaller.”