The U.S. Energy Information Administration (EIA) today forecasted U.S. households will spend more money on energy this winter than last year, especially those that heat with propane or heating oil.
Forecast expenditures are based on our expectations of high retail energy prices—many are already at multiyear highs—and of slightly more energy consumption per household than in the previous winter. Notably, many energy prices reached multiyear lows last year as a result of the COVID-19 pandemic.
Retail energy prices for several fuels are already at their highest point in several years. Although price increases over the past year can be attributed to several factors, the main reason wholesale prices of natural gas, crude oil, and petroleum products have risen is that fuel demand has increased from recent lows faster than supply, in part, because of economic recovery after the first year of the COVID-19 pandemic. To varying degrees, these increases in wholesale prices are being passed through to consumers.
With energy prices on the rise, it is critical that policymakers keep this in mind and promote commonsense, pro-consumer policy and regulation when it comes to American energy. That starts with advocating for policies that welcome development of North American natural resources as well as investment in energy infrastructure.
Unfortunately, many are working against American energy security + affordability. For example, Michigan Gov. Gretchen Whitmer has put politics and ideology before her constituents’ energy needs – calling for the shutdown of Line 5 – which supplies 65% of propane demand in the Upper Peninsula, and 55% of Michigan’s statewide propane needs – with no feasible replacement.
As the economy continues to recover from the COVID-19 pandemic, now is not the time to create new policies and hurdles that lead to increased energy costs for American families.