In a year of $4 gas and $6 diesel, one bill should get smaller. The furnace. The Journal's Ryan Dezember reported Thursday, Oct. 22 that homes heated with natural gas should pay about 9% less this winter. That's about $640 on average for November through March, by the Energy Information Administration's estimate. About 46% of American homes run on gas heat.
The reason is supply. Gas starts the heating season about 19% cheaper than a year ago. U.S. output rose 4% in the first half of the year. The EIA expects a record 122.5 billion cubic feet a day in 2026. Stockpiles sat a bit above the five-year average earlier this month. A 24% jump in solar power this summer helped too. It spared the gas in storage through the hottest July on record. Forecasters also expect a mild winter across much of the country.
November futures settled at $2.79 per million BTU on Wednesday, Oct. 21. Goldman Sachs (GS) expects an average of $2.95 this winter, one of the lower calls out there. Count propane, which often comes from the same wells, and more than half of U.S. households heat with a fuel that should cost less than last year.
Who still pays more
Heating oil is the exception. It's close kin to diesel, and diesel is at record highs, up nearly 75% in a year. The more than four million homes that burn heating oil, mainly in the Northeast and Alaska, should pay about 21% more, the EIA says. Heating-degree days are a measure of how cold it gets. The EIA expects 12% fewer of them than last year in the Northeast and 25% more in the West, with higher bills there. Electricity has outrun inflation too, with data centers in the argument. A gallon of gasoline costs about $4.26, roughly 40% more than a year ago.
There's a wrinkle in the gas story. Drillers in the Permian pump gas as a byproduct of oil, and high oil prices keep them going. Wells in Appalachia have been held back while prices were low. EBW Analytics warned clients that producers could open those wells once cold weather lifts prices, flooding the market. That would be good for your bill and hard on gas producers.
Our read
This is Cash Flow, M5. Budget the winter by the fuel in your basement. Gas and propane households can pencil in roughly 9% less than last winter. Heating-oil households should plan on about 21% more, on top of a year that already hurt. Western homes may run the furnace more than last winter, even at the lower gas price. We wrote about the Northeast heating-oil squeeze on Oct. 20. The gas news is the new part, and it's the good part. Goldman Sachs is in the story only as a forecaster. It's held at weight in 19 books; nothing added.
Your check this week is the fuel line on last winter's bills. Pull November through March of last year from your gas or oil account and add them up. If you heat with gas, that total less 9% is a fair planning number, and the difference can go to the emergency fund. If you heat with oil, that total plus 21% is the number to set aside now. Ask your dealer about a pre-buy, which can lock a price, or a budget plan, which spreads the cost. The time to fill the tank is a mild October afternoon. If you'd like help fitting the winter number into your budget, we're glad to look at it with you.