The EIA expects elevated crude oil prices to result in higher prices for heating oil, natural gas, and propane. Heating oil users will take the biggest hit, with a 29 percent increase in prices, although a slightly warmer winter in the Northeast is expected to hold the increase in those households' heating bills to 28 percent. The EIA says inventories of heating fuels are sufficient to avoid price spikes from surges in demand under most circumstances.
The EIA notes that current spot prices for crude oil continue to fluctuate above the $45 per barrel range, and projects the price for the fourth quarter to average about $46.40 per barrel. Prices remain high despite increased production by the Organization of Petroleum Exporting Countries (OPEC), in part because of oil production losses due to the September hurricanes in the Gulf of Mexico. The hurricanes also impacted natural gas production. The spot price for natural gas at the Henry Hub, a major distribution point, averaged $5.15 per thousand cubic feet in September, and the EIA expects it to average $6.18 per thousand cubic feet in 2005.
Publication date: 10/18/2004