Even with higher demand for natural gas, customers will see bill decrease this heating season. Propane, heating oil prices projected to be up

Rick Snyder, Governor
Anne Armstrong Cusack, Executive Director

 

FOR IMMEDIATE RELEASE — October 18, 2018

Contact: Nick Assendelft 517-284-8300

Customer Assistance: 800-292-9555

 

LANSING, Mich. – Energy use in Michigan this winter likely will increase, according to the annual Winter Energy Appraisal by the Michigan Agency for Energy (MAE), with higher demand for natural gas, propane and electricity, reflecting Michigan’s economic strength, population growth and lower unemployment.

For 2018, demand for gasoline and distillate – primarily used to produce diesel fuel – is also projected to be higher compared to last year, according to the report released today.

Homeowners who use natural gas for heat – about 77 percent of Michigan households -- can expect their heating costs to decrease with an expected return to normal temperatures, even though demand is projected to be up, and supplies are below the five-year average. Propane and heating oil customers can expect increased demand and higher prices.

A look at the various fuel categories:

NATURAL GAS

  • Key takeaway: Higher sales for 2018 have been driven primarily by an increase in demand from the electric power generation sector following a warmer than normal summer (over 20 percent warmer, according to preliminary data).
  • Demand: Projected to increase 12.4 percent.
  • Supply: Inventories are 22 percent below the five-year average.
  • Cost: Bills are expected to decrease 7 percent, reflecting a drop in the commodity price of natural gas.

 

 

PROPANE

  • Key takeaway: More than 8 percent of Michigan households heat with propane vs. 5 percent nationally.
  • Demand: From November to March, propane usage is expected to increase by 6 percent compared to 2017/18.
  • Supply: U.S. inventories are 2 percent above levels seen last year at this time but 7 percent below the five-year average.
  • Prices: Up 10 cents per gallon (5 percent) for the average residential customer, compared to this time last year.

MOTOR GASOLINE

  • Key takeaway: Increase in consumption the result of more miles traveled due to stable prices, growing employment, and rising wages.
  • Demand: 2018 is sixth year in a row of higher demand in Michigan.
  • Supply: Regional gas production for 2018 projected to be up 1.4 percent, but inventories are down marginally.
  • Prices: Up an average of 33 cents per gallon (13 percent) from this time last year in Michigan. 

ELECTRICITY

  • Key takeaway: Demand is expected to increase in all sectors but will be led primarily by growth in residential demand. Primary drivers for the increase in the residential sector are cooling during hot weather and home heating during winter.
  • Demand: Total sales expected to be up 2.9 percent in 2018.
  • Supply: No supply shortages or transmission constraints are expected to affect projected demand this winter.
  • Prices: Year-over-year changes in residential bills can vary substantially by utility. In 2018, DTE Electric Co. saw a 3.8 percent increase compared to last year, while Consumers Energy Co. saw a decrease of 0.9 percent.  In the central and western areas of the Upper Peninsula, residential bills continue to be some of the highest in the state despite year-over-year decreases.

DISTILLATE FUELS

  • Key takeaway: This year marks the third straight year of expected growth in sales, 99 percent of which is used to produce diesel fuel.
  • Demand: 3.4 percent growth in 2018.
  • Supply: Regional production expected to be up 4.8 percent compared to last year, while national inventories are flat but 5.2 million barrels below the five-year average.
  • Prices: Diesel fuel prices are up 57 cents per gallon; heating oil is nearly 21 percent higher than last year at this time.

Among significant developments in the state’s energy outlook:

  • The agreement between the State and Enbridge Energy Partners, LLC that will lead to safety enhancements along the entire length of the Line 5 petroleum pipeline and contract a multi-use utility tunnel for a replacement pipeline, and permanently shut down the twin segments of the line that currently cross the Straits of Mackinac.

 

  • Changing propane market dynamics that reflect an increase in exports overseas, where the fuel is used to meet heating demand and in the petrochemical market. Lower than average supplies and continual export strength could result in volatile prices, if the U.S. experiences colder-than-normal temperatures this winter.

Read the full Michigan Winter Energy Appraisal by clicking here.

For help with heating bills or energy self-sufficiency, nine agencies statewide have been awarded grants through Michigan Energy Assistance Program (MEAP). For information about the Home Heating credit, click here.

For help in weatherizing homes to cut energy costs, click here.

To keep up on MAE matters: Website | Listserv | Facebook | Twitter | LinkedIn

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