This is an excerpt from EERE Network News, a weekly electronic newsletter.

February 18, 2004

After a Cold December, EIA Expects Higher Winter Heating Costs

A cold December boosted the energy demand for heating and kept fuel prices high, according to a report released on February 10th by DOE's Energy Information Administration (EIA). Due to the higher energy usage and elevated costs, EIA now projects that households heating with natural gas will see an 11 percent increase in heating costs compared to last winter, and those heating with propane and electricity will see increases of 7 percent and 2 percent, respectively, compared to last year. Households heating with heating oil will see a slight decrease in heating costs, about 1 percent lower than last year's costs.

High crude oil prices in December and January also helped push up gasoline prices, and the EIA projects that prices for regular grade will average $1.62 for the first quarter of 2004. However, the EIA assumed that OPEC (the Organization of the Petroleum Exporting Countries) would keep production quotas steady; in reality, OPEC decided on February 10th to cut its production by about 4 percent, starting on April 1st. OPEC's production cut could cause U.S. gasoline prices to increase. See the EIA's Short-Term Energy Outlook and the press release from OPEC's February 10th meeting.