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Winter heating forecast: Oil down, natural gas up

September 15, 2013

Despite one last gasp of 90-degree weather last week, fall is fast approaching, and it soon will be time to fire up those furnaces.

For those dreading the return of cold and snow, and bemoaning the summer that seemingly never was, there is some good and bad news when it comes to the heating cost forecast.

The U.S. Energy Information Administration is predicting the cost of heating oil will be cheaper this winter, but the price of natural gas is expected to go up.

In the fourth quarter of 2012, heating oil was $3.85 a gallon and in the first quarter of 2013 it was $3.89 a gallon. EIA Senior Economist Tancred Lidderdale said that number is expected to drop to $3.75 a gallon for the fourth quarter of 2013 and $3.69 a gallon for the first quarter of 2014.

The price of heating oil is driven by the price of crude oil, which after jumping to more than $110 per barrel last week, is expected to gradually fall over the coming months.

“The primary reason behind (the expected price decrease) is the growing production of crude oil in the U.S. and Canada, which in August was at its highest level in 25 years,” Lidderdale said. “Of course, there is some uncertainty because of the ongoing unrest in North Africa.”

The price of natural gas, on the other hand, is expected to increase about 18 percent from last winter, as the EIA is predicting a jump from $11.76 per thousand cubic feet in the fourth quarter of 2012 to $13.86 in the fourth quarter of 2013. It’s expected to come back down to $12.95 in the first quarter of 2014.

Lidderdale said increase is deceiving considering last winter’s price was the lowest in 10 years.

“The Marcellus drilling boom really pushed things down over the past few years … but that couldn’t be sustained,” Lidderdale said. “It bottomed out last winter and now it is slowly coming up to where it should be.”

Of course the price of heating fuels might not end up meaning much if the area is slammed with a harsh winter that results in increased usage.

While a forecast at this point is premature, WUTR-WFXV Chief Meteorologist Jeff Matthews said he is expecting a typical Central New York winter.

“Generally speaking, the parameters that would have pointed toward a lighter winter have gone neutral now, and are probably heading a bit in the opposite direction,” Matthews said. “Snow and temperature-wise, I think it will be an average of the past two years.”

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National Oilheat Research Alliance ECC is funded in part through the National Oilheat Research Alliance.