Residential Heating Costs Expected to Be 10 Percent Higher This Winter: EIA

Residential energy costs for household heating with propane and natural gas for the current winter have increased compared to the previous winter, according to an Feb. 20 report published by the U.S. Energy Information Administration. The agency projects retail energy costs to be 10 percent higher than last winter.

The agency in their Winter Fuels Outlook published in October 2024 projected that households utilizing natural gas for their heating would spend between two percent less or seven percent more during the current winter compared to the last, depending largely on weather conditions.

January’s cold weather increased natural gas consumption and resulted in near-record withdrawals of natural gas from storage. January in the U.S. historically has 831 population weighted heating degree days (HDDs), which is a measure of heating demand, based on the previous 10 January’s. During January 2025 there were 927 HDDs, indicating a colder January compared to the monthly average.

During the week ending Jan.24, stocks declined by 321 billion cubic feet (Bcf), which was around 70 percent higher than the five year (2020-24) average withdrawal for the same during January. U.S. natural gas storage withdrawals during January totaled close to 1,000 Bcf, as a result U.S. natural gas inventories are around four percent below their previous five-year average. U.S. gas inventories have been in a steep withdrawal mode during the current winter and started the winter 2024-25 six percent above the previous five-year average (2019-23).

As a result of the increase in storage withdrawals, the agency revised the 2025 Henry Hub natural gas spot price. The agency projects the price to average $3.80 per million British thermal units (MMBtu) during 2025. This is about 20 percent higher than the previous forecast.

U.S. propane inventories were relatively full at the start of the winter season and have been drawn down as consumption rose significantly. Moreover, U.S. propane exports also reached record highs, domestic propane with underlying price support.

Wholesale propane and natural gas prices rose at the back end of 2024 and continued their upward price trend into January. In their initial forecast, the agency had projected wholesale propane and natural gas prices to rise during the winter, however the magnitude of the actual price increase has been higher than initially projected.