Heating bills drop with oil, natural gas prices

The weather this winter has been erratic and, on many days, unseasonably warm. Gas and oil prices have gone down considerably in the past two years.

Many conclusions can be drawn from these facts, but one seems certain and relatively palatable: Americans are spending less to heat their homes this year.

According to The Associated Press, the U.S. Department of Energy predicted this turn of events before winter began in 2015, citing predicted warmer weather and lower energy prices as the reasons.

In the February short-term energy outlook from the U.S. Energy Information Administration (EIA), the biggest savings would be found for those who use propane or oil to heat their homes, predicting a 25 percent drop in spending for homes using heating oil and a 21 percent drop for homes using propane compared to last winter.

Natural gas spending will drop by 10 percent, and residential electricity spending will drop by 3 percent, the report said.

In Missouri, the price of propane has dropped considerably since 2014. In February of that year, residential propane averaged more than $3 a gallon.

In 2015, it was at $1.84 per gallon.

So far in 2016, February’s residential propane prices are $1.39 a gallon, according to the EIA.

The reduced use and lower cost of energy is being felt by the energy companies. AmeriGas, a national propane company with services in Cape Girardeau, saw a loss in the first quarter of 2016.

In a news release, Jerry E. Sheridan, president and CEO of AmeriGas, said the drop was because of a “challenging quarter with weather that was approximately 20 percent warmer than normal and nearly 17 percent warmer than the prior year.”

More than half of Midwestern homes rely on natural gas for heat, the EIA reported, followed by electricity, then propane.

Although energy prices are dropping, local home heating specialists are not necessarily seeing a change in the way people are heating their homes.

Chris Janet, director of sales at Dutch Enterprises, said volatility in oil and gas prices keeps people from changing their heating system to a different energy source.

Prices may be low now, he said, “but history tells us they won’t stay down for long.”

The price of natural gas is expected to rise later this year because increased use in the industrial sector, according to Adam Sieminski of the EIA in a statement made before the U.S. Senate Committee on Energy and Natural Resources.

Electricity rates have not been trending downward as sharply as other energy sources.

Since the recent announcement of Noranda’s bankruptcy and the likely closure of its plant in New Madrid, Missouri, there is concern those rates soon could be affected. The smelter was Ameren’s biggest customer, consuming 10 percent of the utility’s total electric output.

Janet said because of this uncertainty, the type of home heating systems people are choosing stay the same, but people are focusing on making their current system more efficient and upgrading to higher-efficiency systems when it’s time to do so.

Don Rice, owner of Flori Heating and Cooling, said he is seeing a change by people moving to geothermal units to get away from the uncertainty in gas and oil prices.

“Propane, natural gas ... all of those are rising, as far as to heat and cool your home,” Rice said, and geothermal units offer “a 60 percent savings on your heating and cooling costs over conventional systems.”

The U.S. Department of Energy said the purchase and installation of such a residential system often is higher than other systems, but it delivers more energy per unit consumed.

The use of solar energy, while not widespread, can be seen in the region in the form of solar panels on the roofs of homes and businesses.

The upfront costs of buying and installing them can be daunting, much like geothermal units.

David Alcorn, owner of Alcorn Electric, said sales have slowed since Ameren recently dropped their rebate program, but homeowners still seek solar energy to offset their electric bill.

“Electric heat’s the worst,” Alcorn said.

Those costs for solar, as well as other high-efficiency units, can often be offset by tax credits and incentives offered by federal, state and local governments.

But those without high-efficiency units for now can enjoy the lightened load on their gas bill.

bbrown@semissourian.com

(573) 388-3630