Wallet Woes: Winter Heating Cost on Fire

Heating bills will skyrocket for millions of Americans this winter, especially for those who heat their homes with heating oil.

While the average U.S. household is expected to pay about $88, or 10 percent more, this winter, people who use heating oil will see their total heating bill increase by 22 percent this season, up an additional $319.

The news comes from the Energy Information Administration, which released this morning its short-term energy outlook for the winter season, which started Oct. 1 and ends March 31.

Although only 7 percent of households in the United States use heating oil, those homes are located primarily in the northeast. Nearly one in three homes in the northeast use heating oil, and as prices have risen 16 percent and consumption has gone up 5 percent, those homeowners can expect higher bills.

This estimated increase comes close to the recently released figures from the National Energy Assistance Directors' Association, which forecast a rise of 28 percent in the average heating oil bill for this winter. The NEDA represents state-run low income energy assistance programs.

For the 58 percent of households that use natural gas, bills will increase by $78, an increase of 10 percent. And for homes heated through electricity -- about 30 percent of the country, with the majority of homes located in the south -- prices will increase 4 percent or $32.

Propane users will pay an estimated 16 percent more this winter, or $221. But the total rise in price depends primarily on where people live. In western states, bills will increase by 10 percent, while in the northeast, propane bills are expected to rise nearly 21 percent.

The higher bills are due not only to higher fuel costs and increased demand, but also because of colder weather. The National Oceanic Atmospheric Administration predicts this winter will be 4 percent colder compared to last winter, but 2 percent warmer compared to the 30-year average.

"Because of expected colder weather, U.S. heating fuel consumption is projected to increase compared with last winter," said the EIA in its report.

The EIA also forecasts that crude oil prices will drop, thanks to a combination of OPEC announcing it would increase oil supplies and the drop in demand for crude oil in the United States during the winter.

For the year, however, the United States is estimated to use 20.8 million barrels a day, up a half a percent compared to last year. And demand will increase another 1 percent in 2008.

Looking into the future, the EIA estimates that gasoline prices in 2008 will average $2.83 compared to $2.75 this past year. It also predicts that gasoline prices will average more than $3 a gallon next May.