EIA Short-Term and Winter Fuels Outlook New York Energy Forum October 18, 21 New York, NY Richard Newell, Administrator U.S. Energy Information Administration Richard Newell, New York Energy Forum, October 21 1
Overview EIA expects average heating bills to be 3% higher this winter than last an increase of $24 to a U.S. average of $986 per household Due to higher fuel prices forecast this winter compared to last 2% higher electricity prices 8% higher heating oil prices 6% higher residential natural gas prices 11% higher propane prices Bill increases are moderated by a warmer winter weather forecast for the South, but little change in the Midwest/West; slightly colder in the Northeast Inventories of fuel oil and natural gas are currently well above typical levels, which helps dampen price increases if winter is colder than expected in contrast, propane stocks are low in the New England region Richard Newell, New York Energy Forum, October 21 2
U.S. households forecast to spend an average of 3% ($24) more on heating bills this winter (October 1 March 31) Percent change in fuel bills from last winter (forecast) Fuel bill Base case forecast If 1% warmer than forecast If 1% colder than forecast Heating oil 12 25 Natural gas 4-7 12 Propane 8-3 18 Electricity -2-6 2 Average of all fuels 3-6 1 Richard Newell, New York Energy Forum, October 21 3
Winter 21-11 heating season forecast is 3% warmer than last winter, and 1% warmer than 3-year average U.S. population-weighted heating degree-days 1, NOAA winter 7.4% warmer than last year 8 6 4 2 Oct Nov Dec Jan Feb Mar Source: NOAA (September 15, 21) 29-21 21-211 (NOAA forecast) Richard Newell, New York Energy Forum, October 21 4
Higher natural gas heating bills for some regions this winter Households using natural gas as primary heating fuel West South Midwest Northeast U.S. 33% 53% 52% 63% 72% Percent change from last winter (forecast) Consumption Average price Total expenditures -3-3 -13 11-3 6 6 5 7 12-2 6 4 Richard Newell, New York Energy Forum, October 21 5
EIA expects residential natural gas prices to be 6% higher this winter than last Dollars per thousand cubic feet (mcf) 25 Winter Forecast 2 Residential price 15 1 5 Henry Hub spot price 26 27 28 29 21 211 212 Richard Newell, New York Energy Forum, October 21 6
Future natural gas prices remain uncertain Dollars per million Btu 14 12 1 8 6 4 2 Henry Hub spot price STEO Henry Hub price forecast NYMEX Henry Hub futures prices 68% NYMEX confidence interval 95% NYMEX confidence interval 26 27 28 29 21 211 212 Forecast Richard Newell, New York Energy Forum, October 21 7
Less than 1% chance of natural gas price being higher than $5.5 per MMBtu for January 211 contract month probability of exceedence 4% 35% 3% 2% 17% 1% 7% % > $4.5 / MMBtu > $5. / MMBtu > $5.5 / MMBtu Source: EIA STEO Oct 13, 21 and CME Group Richard Newell, New York Energy Forum, October 21 8
Natural gas inventories are close to last year s record-high levels Billion cubic feet Forecast 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 1% warmer 1% colder Base case 28 29 21 211 212 Normal range Richard Newell, New York Energy Forum, October 21 9
Winter electricity bill forecast shows little change from last winter Households using electricity as primary heating fuel West South Midwest Northeast U.S. 18% 13% 32% 37% 61% Percent change from last winter (forecast) Consumption Average price Total expenditures -1-6 2-4 -1 1 3 2 5-4 2-2 Richard Newell, New York Energy Forum, October 21 1
Winter heating oil bills are likely to be higher in most regions Households using heating oil as primary heating fuel West South Midwest Northeast U.S. 1% 2% 2% 7% 3% Percent change from last winter (forecast) Consumption Average price Total expenditures 2 7 9-11 8-4 -1 1 1 5 8 13 3 8 12 Richard Newell, New York Energy Forum, October 21 11
Crude oil price forecasts are very uncertain Dollars per barrel WTI spot price STEO WTI price forecast NYMEX light sweet crude oil futures prices 68% NYMEX confidence interval 95% NYMEX confidence interval Forecast 18 16 14 12 1 8 6 4 2 27 28 29 21 211 212 Richard Newell, New York Energy Forum, October 21 12
U.S. heating oil retail price forecast to average 23 cents per gallon higher than last winter Dollars per gallon Dollars per barrel 5. Winter Forecast 2 4. 3. Heating oil price 15 1 2. 1. WTI crude oil spot price 5. 26 27 28 29 21 211 212 Richard Newell, New York Energy Forum, October 21 13
Uncertainty over future heating oil prices is driven primarily by crude oil prices Dollars per gallon 5 4 3 2 1 Heating oil average U.S. wholesale price STEO heating oil wholesale price forecast NYMEX N.Y. harbor heating oil futures prices 68% NYMEX confidence interval 95% NYMEX confidence interval Forecast 26 27 28 29 21 211 212 Richard Newell, New York Energy Forum, October 21 14
Less than 1% chance of wholesale heating oil price being higher than $2.75 per gallon for January 211 contract month probability of exceedence 4% 3% 27% 2% 1% % 1% 3% > $2.5 / gallon > $2.75 / gallon > $3. / gallon Source: EIA STEO Oct 13, 21; and CME Group http://www.eia.gov/emeu/steo/pub/uncertainty.html Richard Newell, New York Energy Forum, October 21 15
Going into winter, distillate inventories are well above the upper end of the normal range Million barrels 2 18 16 14 12 1 8 6 4 2 1% warmer Forecast 1% colder Base case Normal range 28 29 21 211 212 Richard Newell, New York Energy Forum, October 21 16
Higher expected propane fuel bills in most regions Households using propane as primary heating fuel West South Midwest Northeast U.S. 4% 4% 8% 4% 5% Percent change from last winter (forecast) Consumption Average price Total expenditures -1 11 1-13 8-6 -1 15 14 5 9 14-3 11 8 Richard Newell, New York Energy Forum, October 21 17
EIA forecasts residential propane prices will average $2.42 per gallon, 24 per gallon higher than last winter Dollars per gallon 3. Forecast 2.5 2. 1.5 1. Winter.5. 26 27 28 29 21 211 212 Richard Newell, New York Energy Forum, October 21 18
Propane inventories are near the middle of the normal range Million barrels 8 7 Forecast 1% warmer 6 5 4 Normal range 3 2 1 1% colder Base case 28 29 21 211 212 Richard Newell, New York Energy Forum, October 21 19
For more information U.S. Energy Information Administration home page www.eia.gov Short-Term Energy Outlook www.eia.gov/emeu/steo/pub/contents.html Annual Energy Outlook www.eia.gov/oiaf/aeo/index.html International Energy Outlook www.eia.gov/oiaf/ieo/index.html Monthly Energy Review www.eia.gov/emeu/mer/contents.html Phone: (22) 586-88 Live expert from 9: AM 5: p.m. EST Monday Friday (excluding Federal holidays) Email: InfoCtr@eia.doe.gov Richard Newell, New York Energy Forum, October 21 2
Supplemental Richard Newell, New York Energy Forum, October 21 21
The changing balance between global consumption and non-opec supply growth can drive oil prices change from prior year million barrels per day 4 3 2 1 change from prior year dollars per barrel Forecast 1 8 6 4 2-1 -2-3 -4 Non-OPEC supply growth (left axis) World consumption growth (left axis) WTI crude oil price (right axis) 21 23 25 27 29 211-2 -4-6 -8-1 Richard Newell, New York Energy Forum, October 21 22
When spare capacity is tight, it can drive prices and volatility higher price of light, sweet crude oil dollars per barrel 14 OPEC surplus capacity 12 WTI crude oil price 1 8 6 4 2-2 -4 spare capacity million barrels per day Forecast 2 18 16 14 12 1 8 6 4 2-6 1999 2 21 22 23 24 25 26 27 28 29 21 211 Richard Newell, New York Energy Forum, October 21 23