WASHINGTON (MNI) – The following is an excerpt from the U.S. Energy
Information Administration’s Short-Term Energy and Winter Fuels Outlook
published Wednesday:

Highlights

– EIA projects average household heating expenditures for natural
gas, propane, and heating oil will increase by 3 percent, 7 percent, and
8 percent, respectively, this winter (October 1 to March 31) compared
with last winter, while electricity heating expenditures fall by less
than 1 percent. Average expenditures for households that heat with oil
are forecast to be higher than in any previous winter.

– This forecast reflects higher prices for natural gas, propane,
and heating oil, and slightly milder weather than last winter in much of
the Nation contributing to lower consumption in many areas.

– According to the National Oceanic and Atmospheric
Administration’s (NOAA) most recent projection of heating degree.days,
the lower.48 States are forecast to be 2 percent warmer during the
October through March winter heating season compared with last winter.
However, heating degree.day projections vary widely among regions, with
the West projected to be about 3 percent colder than last winter, and
the South projected to be about 5 percent warmer.

– Forecast U.S. real gross domestic product (GDP) grows by 1.5
percent this year and by 1.8 percent next year, slightly lower than in
last month’s Outlook. World oil.consumption.weighted real GDP grows by
3.0 percent and 3.5 percent in 2011 and 2012, respectively, compared
with 3.1 percent and 3.8 percent in the last Outlook. EIA expects the
U.S. average refiner acquisition cost of crude oil to average $99 per
barrel in 2011 and $98 per barrel in 2012, compared with $100 per barrel
and $103 per barrel, respectively, in the previous Outlook.

– Natural gas working inventories ended September 2011 at 3.4
trillion cubic feet (Tcf), about 2.6 percent, or 91 billion cubic feet
(Bcf), below the 2010 end-of-September level. EIA expects that working
natural gas inventories will approach last year’s high levels by the end
the injection season. The projected Henry Hub natural gas spot price
averages $4.15 per million British thermal units (MMBtu) in 2011, $0.24
per MMBtu lower than the 2010 average. EIA expects the rate of growth in
domestic natural gas production to slow in 2012, with the Henry Hub spot
price averaging $4.32 per MMBtu.

Projected Winter Fuel Expenditures by Fuel and Region

The average household winter heating fuel expenditures discussed in
this Outlook provide a broad guide to changes compared with last winter,
but fuel expenditures for individual households are highly dependent on
local weather conditions, market size, the size and energy efficiency of
individual homes and their heating equipment, and thermostat settings.

Natural Gas

EIA expects households heating with natural gas to spend an average
of $19 (3 percent) more this winter than last winter. About one-half of
U.S. households utilize natural gas as their primary heating fuel. The
increase in natural gas expenditures represents a 4-percent increase in
prices and a 1-percent decrease in consumption. In the Midwest, where 71
percent of households use natural gas as the primary heating fuel,
average household expenditures are expected to be unchanged from last
winter. The projected changes in residential natural gas prices this
winter range from a 2 percent decline in the West to a 10 percent
increase in the South. Price changes vary across regions because of a
number of factors such as regional changes in production and pipeline
supply capacity and differences in regulatory constraints in passing
price changes through to customers.

Heating Oil

EIA expects households heating primarily with heating oil to spend
an average of about $193 (8 percent) more this winter than last winter
as a result of a 10-percent increase in prices and a 1-percent decrease
in consumption. About 6 percent of U.S. households depend on heating oil
for winter fuel; however, the Northeast accounts for about 80 percent of
these households. EIA projects residential heating oil prices to average
$3.71 per gallon during the winter season, 33 cents per gallon more than
last winter, and the highest average winter price on record (although
lower than the record heating oil prices realized during the summer of
2008 when crude oil and all petroleum product prices hit their peak).

Propane

About 5 percent of total U.S. households heat with propane. EIA
expects households heating primarily with propane to spend more this
winter, but that increase varies across regions. EIA expects that
households in the Midwest will see an average increase in winter propane
expenditures of 4 percent, as projected residential propane prices
increase by 5 percent from last winter and consumption falls by about 1
percent. Households in the Northeast may see a larger increase in
propane prices with expenditures rising by 9 percent.

Electricity

Households heating primarily with electricity can expect to spend
an average of $6 (1 percent) less this winter. Projected household
electricity expenditures are lower this winter because the decline in
consumption more than offsets a 1-percent increase in prices. About 37
percent of all U.S. households rely on electricity as their primary
heating fuel, ranging from 14 percent in the Northeast to 62 percent in
the South. The number of households heating with electricity is expected
to increase by 1.7 percent from last winter. About 80 percent of the
increase occurs in the South, where electric heat pumps are popular.

** Market News International Washington Bureau: 202-371-2121 **

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