Residential Energy 2017: Fuel Prices, Heating, and Cooling For National Energy Assistance Directors Association February 28, 2017| Washington, D.C. Presented by Tom Leckey Assistant Administrator for Energy Statistics, U.S. Energy Information Administration

Overview Macroeconomic observations Price trends for residential fuels Petroleum Natural gas Electricity Features of residential energy demand Heating fuels, natural gas, electricity Forecast trends for cooling energy Links to EIA web site Tom Leckey, NAEDA Washington, DC February 28, 2017

Key Takeaways Residential retail prices for most fuels are slightly higher than last year, rebounding from very low prices last winter Natural gas is up 12 percent Electricity is up 1 percent Fuel oil is up 19 percent Propane is up 13 percent (Northeast), and 20 percent (Midwest) Fuel prices are projected to increase slightly next winter; Electricity is becoming more important as a heating fuel; Air conditioning use continues to grow; summer electricity prices are projected to be slightly lower in 2017. Tom Leckey, NAEDA Washington, DC February 28, 2017

Expenditures on energy as a percentage of GDP are near a 25-year low U.S. annual energy expenditures Share of gross domestic product Source: February 2017 Short-Term Energy Outlook Tom Leckey, NAEDA Washington, DC February 28, 2017

Energy’s share of household expenditures has declined dramatically in the last two years Tom Leckey, NAEDA Washington, DC February 28, 2017

WTI is forecast to average $53/barrel in 2017 and $56/barrel in 2018; Brent averages $1/barrel above WTI in both years WTI crude oil price dollars per barrel Source: February 2017 Short-Term Energy Outlook Tom Leckey, NAEDA Washington, DC February 28, 2017

Relatively stable crude oil prices are expected to keep U. S Relatively stable crude oil prices are expected to keep U.S. average retail gasoline prices between about $2.20/gal and $2.60/gal U.S. gasoline and crude oil prices dollars per gallon Source: February 2017 Short-Term Energy Outlook Tom Leckey, NAEDA Washington, DC February 28, 2017

Henry Hub natural gas spot prices are forecast to average $3 Henry Hub natural gas spot prices are forecast to average $3.43/MMBtu in 2017 and $3.70/MMBtu in 2018 Henry Hub natural gas prices dollars per million Btu Source: February 2017 Short-Term Energy Outlook Tom Leckey, NAEDA Washington, DC February 28, 2017

Residential gas prices are higher this winter, but are projected to stay in seasonal ranges Monthly average U.S. natural gas prices dollars per thousand cubic feet Source: February 2017 Short-Term Energy Outlook Tom Leckey, NAEDA Washington, DC February 28, 2017

Rising natural gas wholesale prices are expected to contribute to rising retail electricity prices in 2017-18 U.S. residential electricity price cents per kilowatthour Source: February 2017 Short-Term Energy Outlook Tom Leckey, NAEDA Washington, DC February 28, 2017

January 2017 was the warmest January since 2006, but for the winter overall, temperatures are expected to be slightly colder this year U.S. winter temperatures by month heating degree days (population-weighted) Source: February 2017 Short-Term Energy Outlook Tom Leckey, NAEDA Washington, DC February 28, 2017

Expenditures are up this winter, but are lower than the five years previously Source: February 2017 Short-Term Energy Outlook Tom Leckey, NAEDA Washington, DC February 28, 2017

Heating Fuel Market Shares Vary by Region Tom Leckey, NAEDA Washington, DC February 28, 2017

Yes, but do not use natural gas RECS Question: Is natural gas available in your neighborhood? Percent of homes No (30%) Yes, but do not use natural gas (11%) Yes, and actually use natural gas (59%) Tom Leckey, NAEDA Washington, DC February 28, 2017

Tom Leckey, NAEDA Washington, DC February 28, 2017

As the ‘electric-only’ share of homes has grown, more homes are dependent on electricity for heating, especially in the South. Source: 2015 Residential Energy Consumption Survey, U.S. EIA Tom Leckey, NAEDA Washington, DC February 28, 2017

Natural gas share for home heating falls, except in the Northeast where it replaces fuel oil; electricity share increases are led by the South. Source: U.S. Census Bureau, American Community Survey Tom Leckey, NAEDA Washington, DC February 28, 2017

Household behavior affects consumption as well. Most households do not regulate heating by programming a thermostat. 51% 16% Although more than half of households have a programmable thermostat, the programming feature is often not being used. Has a programmable thermostat for heating Yes No Main Heating Equipment Control Program automatically Manually adjust Turn off and on as needed No control over temperature Not applicable Tom Leckey, NAEDA Washington, DC February 28, 2017

NOAA is forecasting temperatures to be warmer than the 10-year average this summer, but slightly more mild than last summer U.S. summer temperatures by month cooling degree days (population-weighted) Source: February 2017 Short-Term Energy Outlook Tom Leckey, NAEDA Washington, DC February 28, 2017

The share of homes using air conditioning continues to grow Tom Leckey, NAEDA Washington, DC February 28, 2017

Air conditioning demand is likely to grow, given population trends. Tom Leckey, NAEDA Washington, DC February 28, 2017

Links to Residential Energy Information Short Term Energy Outlook Weekly Natural Gas Storage Report Hourly Electricity Consumption Data Residential Energy Consumption Survey Today in Energy Contact information: thomas.leckey@eia.gov Tom Leckey, NAEDA Washington, DC February 28, 2017