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EIA: Energy, Fuel Expenditures to Decrease This Winter

WASHINGTON — U.S. household expenditures for natural gas, heating oil, electricity and propane will decrease this winter heating season (Oct. 1 through March 31) compared with last winter, according to projections in the U.S. Energy Information Administration’s (EIA) Short-Term Energy and Winter Fuels Outlook.

Average household expenditures for propane and heating oil are projected to be 27% and 15% lower, respectively, which the EIA attributes to lower heating demand and prices. Because of these factors, the EIA projects natural gas and electricity expenditures that are 5% and 2% lower, respectively, than last winter.

U.S. regular gasoline retail prices—which fell to an average of $3.41 per gallon in September—are projected to decline to an average of $3.14 per gallon in December, the EIA reports. Regular gasoline retail prices are projected to average $3.45 per gallon in 2014, and $3.38 per gallon in 2015, down slightly from 2013’s average of $3.51, according to the report.

North Sea Brent crude oil spot prices fell to an average of $97 per barrel (bbl) in September, which the EIA attributes to “weakening global demand,” and says is the first month Brent prices averaged below $100/bbl in more than two years. Brent crude oil prices are projected by the Administration to average $98/bbl in fourth-quarter 2014, and $102/bbl in 2015. The West Texas Intermediate (WTI) discount to Brent, which averaged $11/bbl in 2013, is expected to average $7/bbl in both 2014 and 2015, the EIA adds.

Total U.S. crude oil production averaged an estimated 8.7 million barrels per day (bbl/d) last month, which the EIA says is the highest monthly production since July 1986. Production averaged 7.4 million bbl/d last year, and is expected to average 9.5 million bbl/d next year. If realized, the administration says that the 2015 forecast would be “the highest annual average crude oil production since 1970.”

Also projected to increase is natural gas plant liquids production, which averaged 2.6 million bbl/d in 2013, to 3.2 million bbl/d in 2015.

Natural gas working inventories on Sept. 26 totaled 3.10 trillion cubic feet (Tcf), 0.37 Tcf (11%) below the level during the same time last year, according to the EIA, and 0.40 Tcf (11%) below the five year average (2009-2013). The Administration projects natural gas working inventories to reach 3.53 Tcf at the end of October, 0.28 Tcf below the level during the same time last year.

The Henry Hub natural gas spot price is projected to be $4.00/million British thermal units (MMBtu) this winter, down from $4.53/MMBtu last winter.

“The price forecast reflects both lower expected heating demand and significantly higher natural gas production this winter,” the EIA says.

The full report is available on the EIA’s website.

Natural gas prices.

(Photo: ©iStockphoto.com/PaulFleet)

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