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THE OUTLOOK FOR WINTER: Costs for heating U.S. households are largely expected to remain flat or decrease this winter – providing some relief to homes that saw a sharp increase in heating costs last winter.
The EIA’s Winter Fuels Outlook, which previews heating costs for the upcoming cold season, is projecting that expenditures for heating homes will largely remain the same or decline – with some dropping as dramatically as $190. The trajectory of costs will largely depend on the fuel that’s being used to heat the home, the region the residence is located, and weather assumptions used in each scenario.
These projections – which, notably, do not account for annual climate variations such as El Niño – could provide consumers who saw energy costs soar last winter a bit of comfort. However, if temperatures are expected to be colder than the EIA’s base estimates, bills could increase between $30-$470.
“The outlook this year is mixed, though we expect that most households will pay less,” said Joseph DeCarolis, administrator of the EIA, in a webinar on Monday.
The reason for last year’s spike: A number of factors could be pointed to for last year’s soaring heating costs – global energy consumption had rebounded from the beginning of the pandemic, and supply was barely keeping pace before the war in Ukraine further reduced supplies.
The report provides scenarios where temperatures are expected to be on par with EIA’S predictions, or colder or warmer than expected. Expenditures for natural gas, which is the dominant heating source for homes across the country, are expected to drop in all scenarios, declining between $110-$190 from last winter’s average expenditure of $760. This is more than a 20% average decrease, when referencing the report’s base scenario.
The reason: Natural gas inventories have remained above the five-year average, and the report expects that supplies will be sufficient enough to meet winter demand when adhering to the report’s base scenario.
However, electricity-powered heating is expected to fall in line with prices from last winter – with average prices ranging between $1,020-$1,100, compared to last year’s cost of $1,080. Forty-two percent of households rely on electric heat pumps or electric resistance heaters as their primary source of heating.
Propane, which is used as a winter fuel in 5% of U.S. homes, could see the biggest increase in costs if temperatures were to be colder than previously assumed. Expenditures could jump to as high as $1,850 – a 34% increase from last year’s. If temperatures are on par with the EIA’s weather predictions, costs could decrease by 3%. If the weather is warmer, costs could decrease to $1,210, or represent a 12.3% decrease.
Heating oil – which is the primary source of fuel for 4% of households – costs are expected to increase in the base and colder winter scenarios, with increases ranging between $130-$250. If warmer temperatures occur, costs could be brought down as much as $70.
How this compares regionally: The report is also predicting that temperatures in the Western U.S. will be warmer than the previous winter – which means western households will likely spend less on heating fuels this winter.
Something to note: The EIA’s newest report has also cut October out of its Winter Fuels Outlook, defining the winter months as running between November through March. In previous years, the agency has included October in their winter projections.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
U.S. AND VENEZUELA REACH DEAL ON OIL SANCTIONS: The U.S. has committed to a preliminary deal to ease sanctions on Venezuela’s oil industry in exchange for a signed agreement from President Nicolas Maduro’s regime to hold a more free and fair presidential election in 2024, including with the presence of independent monitors.
Norway, which is facilitating the talks, said on Twitter today that Venezuelan officials are expected to meet with opposition figures in Barbados starting tomorrow.
The Washington Post reports that the agreement is expected to include a process for lifting a ban on opposition candidates in the country, and a requirement that Maduro commit to accepting the results of an internationally overseen election in 2024.
After the deal is signed, the U.S. is prepared to lift certain oil sanctions against Venezuela, two sources told the Post—potentially including the lifting of a general license for Venezuela’s state-owned oil company, PDVSA, to resume business with the U.S. and other countries.
News of the agreement comes nearly a year after the last direct meeting between Maduro’s regime and opposition leaders in the country.
People familiar with the plans told Bloomberg that Biden administration officials will also attend tomorrow’s meeting in Barbados. Read more on the sanctions relief effort here.
HOW THE ISRAEL-HAMAS WAR WILL AFFECT TRADE AND COMMODITIES SHIPPING: The Israel-Hamas war has prompted new fears about disruptions to shipping and trade in the region, which analysts warn could push prices higher and upend commodities shipments in one of the most important energy-producing corners of the world.
Though the war itself has not yet had a direct impact on oil and gas production, markets are already reacting amid fears of expansion or a broader conflict.
Still, commodities markets “will remain on tenterhooks” as the crisis unfolds, the IEA said late last week. That’s also the conclusion of Container XChange, a shipping logistics company, which published a report Friday outlining the ways that a protracted war could significantly harm business and global trade.
Since the Middle East accounts for more than one-third of the world’s seaborne oil trade, any expansion of hostilities could introduce fresh risks to the area, including disrupting or choking off shipping activity at key waypoints such as the Suez Canal and the Strait of Hormuz.
Both are key for commodities and container shipping, and “any expansion of the hostilities beyond the country’s borders could introduce risks to two vital shipping choke points,” Christian Roeloffs, co-founder and CEO of Container xChange, told Breanne. “The Suez Canal, a critical waterway for various commercial vessels, including container ships, may face disruptions. Similarly, the Strait of Hormuz, a backbone for oil and gas shipping, could be affected,” he added. Read more here.
RUSSIA BANS JAPANESE SEAFOOD IMPORTS AFTER FUKUSHIMA WASTEWATER RELEASE: Russia said today it will join China in banning imports of fish and seafood from Japan, citing its decision to release treated radioactive wastewater from the Fukushima nuclear power plant in August.
Russia described the restrictions as a “precautionary measure.” But it is likely to have a significant impact on Moscow’s seafood industry, as a large amount of its fish and seafood is caught in waters close to Japan. Russia also imported 118 metric tons of fish and seafood from Japan in the first nine months of 2023, according to data from Russian agricultural watchdog Rosselkhoznadzor.
Japan’s foreign ministry said it has already provided Russia with detailed information on its wastewater release process, including its inspection methods for radioactive materials in aquatic products and “the safety of Japanese aquatic products based on scientific evidence.”
In a statement today, Japan’s Ministry of Agriculture, Forestry and Fisheries called for the ban to be overturned, saying it has “no scientific basis,” and “is unjust and regrettable,” according to a local news outlet.
ESG CRACKDOWN FOR EUROPEAN UNION BANKS: The European Banking Authority asked banks in the European Union to adjust their risk assessments to reflect changes made to the Pillar 1 framework, which for the first time has been updated to incorporate environmental and social risks.
The EBA’s changes, announced last week, could have major implications for high-emitting sectors in the EU, such as oil, gas, cement, steel, and mining industries, according to Bloomberg.
Some obligations will be enforced immediately, while others will be rolled out over time and alongside new legislation. But the EBA’s announcement has sparked concern from the European Banking Federation, one of the area’s largest bankers’ associations, which has cited concerns that there’s insufficient data to justify imposing Pillar 1 ESG adjustments, rather than so-called Pillar-2 rules.
The EBF’s chief concern is now that the prudential framework “remain evidence and risk based,” Denisa Avermaete, senior adviser at the EBF, told Bloomberg. “It is also crucial that once the EBA considers a more comprehensive revision of Pillar 1 or a macroprudential framework, this is done at a global level to ensure a level playing field for EU banks.”
FOR YOUR RADAR: Economists and other experts from Brookings’ Hutchins Center on Fiscal and Monetary Policy will gather for a webinar today to evaluate the efficacy of the Russian oil price cap 10 months after it came into force.
The Rundown
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