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Winter heating bills set to rise as inflation hits home

NEW YORK (AP) – Prepare to pay significantly higher heating bills this winter, along with seemingly everything else.

With the global price of fuel oil, natural gas and other fuels soaring, the U.S. government said on Wednesday that it expects households to see their heating bills soar by up to 54% from the previous year. last winter.

Almost half of homes in the United States use natural gas for heat, and they could pay an average of $ 746 this winter, 30% more than a year ago. Those in the Midwest could be particularly pinched, with bills rising about 49%, and it could be the most expensive winter for natural gas-heated homes since 2008-2009.

The second most used source of heat for homes is electricity, accounting for 41% of the country, and these households could see a more modest increase of 6% to $ 1,268. Homes using fuel oil, which make up 4% of the country, could see an increase of 43% – over $ 500 – to $ 1,734. The largest increases are likely for homes that use propane, which make up 5% of U.S. households.

This winter is expected to be slightly colder across the country than last year. This means people will likely burn more fuel to warm up, on top of paying more for each piece. If the winter turns out to be even colder than expected, heating bills could be higher than expected, and vice versa.

The US Energy Information Administration forecast is the latest reminder of rising inflation plaguing the global economy. Earlier Wednesday, the government released a separate report showing prices were 5.4% higher for U.S. consumers in September than a year ago. This matches the highest rate of inflation since 2008, as a waking economy and booming supply chains drive up prices for everything from cars to groceries.

Rising prices have hit everyone, with wage increases for most workers so far having failed to keep up with inflation. But they have particularly affected low-income households.

“After the beatings people received during the pandemic, it’s like, what’s next? Said Carol Hardison, executive director of Crisis Assistance Ministry, which helps residents of Charlotte, North Carolina, facing financial hardship.

She said households that recently asked for help had unpaid bills about twice as high as before the pandemic. They are struggling with more expensive housing, higher medical bills and sometimes a reduction in their hours worked.

“This is what we know about this pandemic: It hit the same people who were already struggling with salaries that did not keep up with the cost of living,” she said.

To make ends meet, families are cutting deep. Nearly 22% of Americans have had to cut back or forgo basic necessities, such as medicine or food, to pay an energy bill in at least one of the past 12 months, according to a survey by September from the US Census Bureau.

“This will create significant hardship for people in the lower third of the country,” said Mark Wolfe, executive director of the National Energy Assistance Directors’ Association. “You can tell them to turn down and try to turn the heat down at night, but many low-income families are already doing it. Energy was already out of reach for them.

Many of these families are just going through a hot summer and have had to contend with high air conditioning bills.

Congress allocates money to energy assistance programs for low-income households, but the directors of these programs are now seeing their purchasing power decline as fuel costs continue to rise, a Wolfe said.

The main reason for the increase in heating bills this winter is the recent surge in energy product prices after they fell to multi-year lows in 2020. Demand has simply grown faster than production as the economy comes back to life. after the closures caused by the coronavirus.

In the United States, for example, natural gas hit its highest price since 2014 and increased about 90% from last year. The wholesale price of heating oil, meanwhile, has more than doubled in the past 12 months.

Another reason for the rise is the globalization of the fuel market. In Europe, strong demand and limited supplies have pushed natural gas prices up by more than 350% this year. This is pushing some of the natural gas produced in the United States towards ships destined for other countries, also adding upward pressure on domestic prices.

The amount of natural gas in storage is relatively small, according to Barclays analyst Amarpreet Singh. This means there is less cushion before the winter heating season.

Heating oil prices, meanwhile, are closely tied to the price of crude oil, which has climbed more than 60% this year. The homes affected by these increases are found primarily in the Northeast, where the percentage of homes using heating oil has risen from 27% to 18% over the past decade.

AP Writer David Sharp contributed from Portland, Maine.

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