Not Everyone Feels the Heating Cost Pain

It's a bad winter if you use oil and are poor.

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I've said before that the pain of high energy prices is not spread out equally, but that point was driven home again in our new story on how bad the winter heating season is beginning to look.

All the projections in the story are brand new this week from the Energy Information Administration. The agency badly underestimated what the price of heating oil would be in its original winter outlook, on Page 6 of this document released in November.

The way the season is shaping up, the cost of home heating with oil will be up 37 percent over last year, not 26 percent as originally projected. Only 7 percent of U.S. households—highly concentrated, as luck would have it, in the cold Northeast and New England—use heating oil. The price increase is less severe for the majority of households that use natural gas—now projected up 8.7 percent, about 2 percentage points less than originally predicted in November. But it's worth noting that there's little choice for many of the people who use heating oil. In many rural areas, they don't even have the option of natural gas hookups. Also, although natural gas heating now appears to be less than half the cost of using heating oil, will that always be the case? Both fuels have been volatile in price.

The other indicator that not everyone shares the energy pain is in the Bureau of Economic Analysis statistic I cite in the story: In 2007, the cost of fuel oil, electricity, and natural gas amounted to just 2.6 percent of disposable income. (The BEA's analysis also includes personal expenditures on coal in that figure, but that must be a relic from the days when my grandmother in Pennsylvania had the misfortune of hauling around buckets of coal and stoking the furnace to keep her home warm in winter.) In any case, those home energy expenditures, as a share of available income, are up only slightly from 2.4 percent in 2001, even though they are up quite significantly in dollar terms. And home energy costs as a share of disposable income are down from 4.3 percent in 1982. So the energy pinch doesn't hurt as much if you've shared in that growth in personal income. If you haven't, you just have to hope for a warm winter.