Heating Prices on the Rise: How to Save Cash this Season

It could be a tough winter for some Americans: Not only are experts forecasting an especially cold winter, it’s going to cost more to heat their homes.

Natural gas bills are projected to climb 13% to $679 for the season, according to the Energy Department’s annual outlook for heating costs. The amount is 4% below the average for the past five winters, but it’s still a big bill for cash-strapped families to afford.

Homes that use electric heat, which is about 38% of the country, will see a 2% increase in their bills as the tab for heating oil customers is expected to drop 2% to $2,046 for the season. This is the second highest bill on record behind 2012’s average of $2,092.

The Energy Department forecasts heating demand will drop by 0.3% across the country, with the Northeast seeing the biggest increase in demand at 3.4%. Demand in the west, is expecting to drop by 3.1%.

Tom Kloza, chief oil analyst at GasBuddy.com, says despite the U.S. being a major oil producer, pricing still remains competitive. He points out that heating costs in states like Texas and Louisiana are still at least one-quarter less than bills on every other continent.

“You can’t look at the prices in the trade in big bulk markets of the Gulf Coast and then compare it to nationwide prices. The U.S. is incredibly privileged to have cheap natural gas prices, particularly when you are close to the source.”

President Obama addressed energy production in the U.S. on Tuesday in his address to the nation, saying, “America's poised to become the number one energy producer in the world this year. This year, for the first time in a very long time, we're producing more oil than we're importing.”

Emerging markets focus more on diesel or heating oil for their usage, Kloza says.

“We are exporting about 1.4 million barrels a day of diesel, or heating oil, so it is a very robust and vibrant world market.”

Those looking to save should consider buying fuel before the real winter hits before mid-November, Kloza recommends.

“My sense is that if winter really delivers some cold temperatures to the Northeast, the price could spike very quickly in late December and January.”

Anthony Stonis, manager of Building Energy Experts, a home performance professional firm in Illinois, says those looking to really cut their heating costs should consider having their home professionally audited before winter.

“Have an energy assessment or audit conducted at your home with a certified energy auditor,” he says. “They will assess the efficiency of your combustion appliances like your water heater, furnace, oven, dryer, and some states will even subsidize the cost. It’s like going to the doctor and finding out how to improve your home.”

The audits can cost can be anywhere from $99 to $500, depending on the size of the home.

The EPA estimates that up to 70% of heating is lost through the ceiling and attic in homes, Stonis says, so having a home insulated and sealed is important. Those who are handy and feel comfortable doing this alone can purchase insulation and caulk and make these improvements on their own, but he cautions that making the home too tight can be a mistake.

Having these improvements done by a professional can run between $1,500 and $2,000, Stonis says, but savings can fall between $300 and $700 annually in energy costs during both heating and cooling seasons.

Changing light bulbs to LED models and trying to upgrade to energy-efficient appliances can  also save on costs and increase efficiency, he says.

“Also, go around the home and look for gaps and cracks in the windows and doors to seal up the area,” Stonis says. “The price of energy will always keep increasing for both gas and electric. Making your home a better return on investment, you will see the return in less than three years.”