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U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585

FOR IMMEDIATE RELEASE
October 8, 1997

EIA Expects Lower Prices for Heating Fuels This Winter

Prices of heating fuels are expected to be lower this winter, compared with last year's levels, according to a report released today by the Energy Information Administration (EIA). Last year concerns over low heating oil inventories and rapidly rising prices prompted Congressional hearings and sparked national interest. This year, peak residential heating oil prices should average about 10 cents per gallon below last year's high mark, even though domestic demand is expected to be higher. EIA's latest Short-Term Energy Outlook reports that stocks of heating oil and propane at the beginning of the heating season are substantially above those of last year.

Peak winter prices for natural gas are also expected to be well below (about 20 percent) last year's peak, unless the winter is unusually cold. However, strong demand for natural gas early in the heating season could result in upward pressure on prices later in the season (December through February). Underground gas storage levels are expected to be slightly higher at the beginning of the heating season than they were last year.

Other highlights from the Short-Term Energy Outlook include:

Lower Crude Oil Prices Expected.
The world crude oil price this winter is expected to be $18-$19 per barrel. For the upcoming heating season (October-March), average U.S. refiner costs of imported oil are expected to be $3-$4 per barrel below the same period last year. Relatively strong world demand should hold prices at or above $18 through 1998.

Currently, supplies of heating oil appear adequate. In addition, the forecast assumes that Iraqi oil production will remain near 1.0-1.1 million barrels per day through December 5 (as authorized by the United Nations Security Council to enable Iraq to reach $1.07 billion oil income for humanitarian needs) before resuming a production level of about 750,000 barrels per day. As a result, the short-term price path is expected to be much tamer than the winter run-up seen last year.

Electricity Peak Demand Up Sharply; Coal Units May Get Strenuous Workout.
Electricity demand is expected to be up sharply in the coming quarters, assuming normal weather this winter, in contrast to the mild winter last year followed by a cool summer. First quarter 1998 electricity demand is expected to be 4.2 percent higher than the 1997 level. Nuclear power is expected to recover somewhat from the 1996 downturn by then, but hydroelectric power could be significantly lower than last year's high levels because of lower rain and snowfall in the Northwest. Sharp increases in fossil fuel use at power generating stations this winter are likely, with most of the load falling on coal. Coal plant utilization is expected to be pushed to new highs early in 1998.

Little or No Decrease in U.S. Oil Production Expected in 1998.
U.S. crude oil production is expected to decrease by 58,000 barrels per day in 1997, but little or no decline in production is now expected in 1998. If this expectation is realized, it will be the first time annual U.S. oil production has not noticeably decreased since 1991, when production was bolstered subsequent to the Gulf War.

The EIA Administrator, Jay Hakes, will update EIA's forecast at the Department of Energy's Winter Fuels conference on October 15 at the Key Bridge Marriott Hotel in Arlington, VA.

The Short-Term Energy Outlook is published quarterly in January, April, July, and October. Monthly updates are now being released on EIA's Internet Web Site to meet the public's demand for more timely availability of energy data and forecasts. Users can view and download the quarterly forecast analysis, monthly updates, and the forecasting model from the EIA Home Page on the World Wide Web system. Open the Uniform Resource Locator (URL) http://www.eia.doe.gov and select "Forecasting" from the menu. The Internet address for direct access to the Outlook is: http://www.eia.doe.gov/emeu/steo/pub/contents.html.

Copies of the published report Short-Term Energy Outlook, Fourth Quarter 1997 will be available from the U.S. Government Printing Office, 202/512-1800, or through EIA's National Energy Information Center, 202/586-8800, on or about October 15, 1997. Press copies are available from EIA's Press Contact.

The report described in this press release was prepared by the Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy.  The information contained in the report and the press release should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy position of the Department of Energy or any other organization.


EIA Program Contact: David Costello, 202/586-1468

EIA Press Contact: Thomas Welch, 202/586-1178

EIA-97-27

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