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Winter heating bills are expected to rise as inflation hits home

Winter heating bills are expected to rise as inflation hits home

This winter, prepare to pay steeper heating bills, as well as seemingly every other thing.

With heating oil, natural gas, and other fuels rising worldwide, the US government said Wednesday that it expects household heating bills to rise by as much as 54 percent over last winter.

Nearly half of the homes in the United States use natural gas for heat, and they could pay an average of $746 this winter, which is 30 percent more than a year ago. With bills rising an estimated 49 percent in the Midwest, this could be the most expensive winter for natural-gas heated homes since 2008-2009.

The second-most-used heating source for homes is electricity, accounting for 41 percent of the country, and those households could see a corresponding 6 percent increase to $1,268. Homes with heating oil, which account for 4 percent of the nation, could see a 43 percent increase more than $500 - to $1,734 in fewer than ten days. The biggest increases are most likely in homes that use propane, which account for 5 percent of US households.

This winter is forecast to be slightly colder in the United States than last year. People will probably be burning more fuel to keep warm, on top of paying more for each bit of it. If the winter turns out to be even colder than anticipated, heating bills may rise faster than expected, and vice-versa.

The US Energy Information Administration's forecast is the latest sign of an ever-increasing rate of inflation in the global economy. The government released a separate report earlier Wednesday that showed that prices for US consumers were 5.4 percent higher in September than he was ten years ago. That is the highest inflation rate since 2008, as a resurgent economy and stifled supply chains push up prices for everything from cars to groceries.

The higher prices hit everyone, with pay increases for the majority of workers so far failing to keep pace with inflation. But they hurt primarily low-income households.

Carol Hardison, the ceo of Crisis Assistance Ministry, which assists Charlotte, N.C., residents in financial difficulties, said: After the beating that people have taken in the pandemic, its like: Whatre the next steps?

She said that households who have been in contact with for assistance recently have unpaid bills that are roughly twice as high as they were before the epidemic. Theyre also paying more for more housing, higher medical bills, and a reduction in the hours they work.

Its what we know about this epidemic: Itll hit the same people who were already struggling with low wages and rising costs of living, she said.

Families are cutting back on food and energy to help themselves. According to a September survey by the US Census Bureau, nearly 22 percent of Americans had to reduce or forego expenses for basic necessities, such as medicine or food, to pay an energy bill in at least one of the last 12 months to cover an electricity bill.

Mark Wolfe, president of the National Energy Assistance Directors Association, stated, This is going to cause substantial hardship for people in the bottom third of our country. You can tell them to cut back and try to reduce the heat at night, but many low-income families do that already. For them, energy was already too costly.

Many of those families are just coming through a hot summer when they faced high air-conditioning bills.

Congress allocates some money to energy assistance programs for low-income households, but directors of those programs are now watching their purchasing power shrink as fuel costs rise, Wolfe said.

The most significant factor for this winter's higher heating bills is the recent rise in energy commodity prices, which fell to multi-year lows in 2020. The economy is now regenerating after the devastating effects of the coronavirus, and demand has simply risen faster than production.

Natural gas in the United States, for example, has reached its highest price since 2014 and is up about 90 percent over the last year. The wholesale price of heating oil has more than doubled in the past year.

Another reason for the rise is the globalization of the fuel industry. This year, a strong demand for natural gas and limited supplies in Europe have pushed prices by more than 350 percent. Thats causing some of the natural gas produced in the United States to go to ships bound for other countries, increasing domestic prices as well.

According to Barclays analyst Amarpreet Singh, the amount of natural gas in storage inventories is relatively small. That means theres less of a cushion heading into winter heating season.

Heating oil prices, on the other hand, are closely tied to the price of crude oil, which has risen more than 60 percent this year. Homeowners in the Northeast, where the percentage of homes using heating oil has fallen to 18 percent from 27 percent in a decade, are most affected by those increases.

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