Lower heating costs predicted for this winterWith oil prices plummeting, the government says people will get a break this winter on their heating bills. And next year’s gasoline prices should average $2.37 a gallon. The Energy Information Administration revised its short-term energy outlook Wednesday to reflect the steep drop in crude oil prices over the past five months and expectations of a more severe global economic downturn.
By: By H. Josef Hebert, The Associated Press, The Jamestown Sun
WASHINGTON — With oil prices plummeting, the government says people will get a break this winter on their heating bills. And next year’s gasoline prices should average $2.37 a gallon.
The Energy Information Administration revised its short-term energy outlook Wednesday to reflect the steep drop in crude oil prices over the past five months and expectations of a more severe global economic downturn.
It said people using fuel oil can expect to pay on average $1,694 during this winter’s heating season, a 13 percent increase over last winter. But that’s nearly $700 less than what was projected by the agency only a month ago.
The 58 million households that heat by natural gas will pay only slightly more than last year, an estimated $889 for the October through March heating season, an increase of 3.6 percent compared with last year.
While natural gas often mirrors oil prices, some of the savings from declining wholesale gas prices will not be passed on to consumers because much of the gas they will use was bought by utilities last summer — when prices were high — and put into storage.
Meanwhile, the agency projects gasoline prices to average $2.37 a gallon next year, compared with $2.22 a gallon last week and national average high of $4.11 early last July.
“The current U.S. and global economic downturn has led to a decrease in global energy demand and a rapid and substantial reduction in crude oil and other energy prices,” said the EIA, the government’s energy statistical agency. And it predicted “as a result of worldwide economic stagnation oil markets are expected to remain weak” through next year.
The agency projected oil prices to average $63.50 a barrel in 2009.
Actual costs of both crude and refined products, including fuel oil and gasoline, may, in fact, be even lower than projected in the EIA report as both crude oil and natural gas have continued dramatic declines this week — declines that may not have been taken into account in the report.
Oil prices for December delivery plunged to $56 a barrel Wednesday on the New York Mercantile Exchange. Wholesale natural gas prices tumbled 30 cents to $6.40 per thousand cubic feet on Wednesday, also for December delivery. The EIA projected wholesale natural gas costing an average of $6.82 next year, $1.35 less than projected a month ago.
Residential fuel oil prices are expected to average $2.75 a gallon during the upcoming winter heating season, or 56 cents a gallon less than predicted a month ago, but still 17 percent higher than last winter. And retail natural gas prices are expected to be $12.72 a thousand cubic feet, or 30 cents less than estimated in early October and only slightly more than last winter.
The EIA said future prices “will primarily depend on the magnitude and duration of the economic downturn” as well as the production policies of the OPEC oil cartel. It said its energy projections assume that OPEC production cuts “may limit, but not reverse, the recent sharp fall in oil prices.”
“The condition of the global economy is expected to remain the most important factor driving world oil prices,” the report said.