The U.S. EIA released projections in its Short-term Energy and Winter Fuels Outlook today. The report says to expect higher average fuel bills this winter in states east of the rocky mountains driven by near-normal winter temperatures in that region. The winter heating season forecast is about 2% warmer than 30-year averages, but 18% cooler than last winter. Look for year-over price increases in heating oil (+2%) and natural gas (+1%). Propane and electricity rates are expected to dip 4% and 2% respectively.
The report expects Brent crude to soften into 2013 and for the WTI margin to shrink back closer to the nine dollar mark. On that basis, EIA expects gasoline prices in 2013 to soften as well, projecting an average national gasoline price around $3.44/gallon. That figure would put 2013 national averages below 2012 and 2011 national average prices.
Natural gas is the heating fuel of choice, warming 115 million homes in the U.S. and prices are expected to fall in closely with last winter's price, but EIA warns that natural gas prices remain uncertain. High domestic inventories bode well for moderating price action.
Heating oil is projected to register a 2% uptick year-over but prices are equally as uncertain as natural gas. Crude is expected to soften, but World events could rain on that parade, pushing heating oil prices higher on the back of volatile crude.
Propane expenditures should also be on the rise throughout the winter depending on cooler temperatures year-over to strengthen demand. Currently U.S. propane stocks are robust enough to keep prices in check for the short-term and should show an overall 4% decrease on the year.