How Winter 2009-10 Forecast Is Forecast to Affect Heating Costs

The U.S. Government's arm that oversees energy statistics and projections, Energy Information Administration (EIA) has released its 2009 Winter Heating expenditure forecast for households and it states the average expenditure per household to be $960 this winter, October 1-March 31. This is a decrease of $84 or 8% from last year. The reason for the decrease and the projected savings is a result of several factors:

• NOAA's Forecast of a Milder Than Normal Winter
• 11% Lower Residential Natural Gas Prices
  
• 14% Lower Propane Prices
  
• Unchanged Heating Oil Prices
  
• Abundant Supply (higher inventories of all fuels compared to this time last year)
  

The National Oceanic and Atmospheric Administration (NOAA) is forecasting Winter 2009-10 to be 1% warmer than Winter 2008-09 and 1% warmer than the 30-year average. Here is their official forecast for heating degree days for the U.S. population, weighted.

(Source: EIA, NEO Winter Fuels Conference, October 2009)

So how does this compare to the Doppler Dale Winter 2009-10 forecast? Well, glad you asked. Based on my earlier forecast, viewable in these two posts (2009 Fall Forecast and 2009-10 Initial Winter Outlook & A Closer Look at the Fall/Winter Outlook), would predict the total normal of heating degree days for the period of October through March to be 3,958. The estimated total based on NOAA's experimental monthly total degree day forecast dated September 16, 2009 would be 3,859. The 30-year average for heating degree days (HDD) is 5,491. Both forecasts show a below normal forecast in the number of heating degree days based on the 30-year average. But most of the heating fuels used in the United States occur east of the Rocky Mountains. So how does the forecast break down for where you live instead of a general national average? I attempt to answer that question for you. Please note that estimate savings and increase costs are estimates and are based on using the EIA forecast projections and extrapolating the differences based on the forecast differences in my forecast versus that of NOAA.

Northeast (CT, ME, MA, NH, RI, VT, NJ, NY, PA, MD, DE)

Doppler Dale Forecast: 5,347 HDD

NOAA Forecast: 5, 279 HDD

30 YR Average: 5,282 HDD

My forecast is for the Northeast to see a winter that is about 2% colder than normal while the NOAA forecast is for near normal. Based on the EIA heating fuel projections and my winter forecast, there would be about a 7% savings for all heating fuel types for this region for this winter versus winter 2008-09; however, the fuel that many in the Northeast rely on is heating oil. The EIA projection for heating oil using the NOAA winter forecast is for a savings of 3% versus 2008-09; however, when you switch out the NOAA forecast for the Doppler Dale forecast that changes to about a 4% increase over last year. The other major heating source in the Northeast is natural gas. When you use the EIA and NOAA forecast combined the projection is for a 14% savings while using my forecast reduces the savings to only about 10%.

OH Valley (IL, IN, OH, WV, KY, TN, MO)

Doppler Dale Forecast: 5,611 HDD

NOAA Forecast: 4,645 HDD

30 YR Average: 4,665 HDD

Big differences here between the NOAA Winter forecast and mine. A large likely reason for this is the years selected as analogs and the thought between El Nino or not. The NOAA forecast tends to generalize all El Nino winters as warmer than normal when that is not a completely true statement. Some El Nino winters have been cooler than normal for this region, such as 2003. My forecast for the region is for a colder than normal winter by about 20% while NOAA is calling for a slightly warmer than normal winter. Due to the significant differences in the winter forecast for this territory significant differences in the expected cost savings or not for heating fuels. Here they are. The heating fuels primarily used in this region are natural gas and propane. Based on the EIA projection using the NOAA forecast it calls for a savings in natural gas of 15% and for propane of 21%. However, switch out NOAA's forecast with mine and things change quite a bit. Natural gas savings change to little if any change and Propane savings are reduced to 5%. Both changes are due to consumption.

Upper Midwest (MN, IA, WI, MI)

Doppler Dale Forecast: 5,082 HDD

NOAA Forecast: 6,282 HDD

30 YR Average: 6,464 HDD

Here NOAA and I agree that above normal temperatures are likely for the Upper Midwest. My forecast is actually warmer than NOAA's which means more savings for you. Like the Ohio Valley, natural gas and propane are the two main heating fuels used and the projected savings in the official EIA forecast are the same, 15% for natural gas and 21% for propane. Using my winter forecast, the savings are increased to about 33% for natural gas and 35 % for propane.

Southeast (VA, NC, SC, GA, FL, AL)

Doppler Dale Forecast: 5,784 HDD

NOAA Forecast: 2,676 HDD

30 YR Average: 2,625 HDD

Again, another region with a BIG difference. Both NOAA and I agree that it will likely be below normal for the Southeast this winter but the magnitude is the BIG difference. NOAA is calling for a winter that is about 2% below normal while my forecast is a whopping 55% below normal! The main heating fuel used for this region is electricity and the current EIA projection for savings this winter using electricity is about 3%. However, use the much colder Doppler Dale forecast instead of NOAA and the savings change to an increase of about 20%, ouch! I am going to have to watch my electrical usage.

Southern Plains (KS, OK, TX, AR, LA, MS)

Doppler Dale Forecast: 3,586 HDD

NOAA Forecast: 2,889 HDD

30 YR Average: 2,887 HDD

Here again differences are large as NOAA is predicting a near normal winter while I am predicting a chilly winter, about 20% below normal. Again, electricity is the main heating fuel and the EIA forecast is for a 3% savings; however, let's switch out NOAA's forecast with mine again and the savings turn into a cost increase of about 6%.

References: EIA Short-term Energy & Winter Fuels OutlookNCDC Historical Heating Degree Days Regional Plots ; CPC Experimental Monthly Total Degree Day Forecast (September 16, 2009) ; 2009 Fall Forecast and 2009-10 Initial Winter Outlook ; A Closer Look at the Fall/Winter Outlook ;