LANSING – The Michigan Agency for Energy released its energy appraisal for the upcoming winter on Wednesday, expecting residents to save big on their heating bills “thanks to lower fuel prices and predicted warmer-than-normal temperatures,” the agency said.
Michigan’s energy market is also expected to have adequate reserves and lower prices, the agency said in a statement. With the expectation of a return to normal winter weather, consumption of home heating fuels such as natural gas, propane and distillate will fall, it said, while demand for motor fuels such as gasoline and diesel will rise.
The National Weather Service projects Michigan to have a 40-to-60 percent chance of a warmer than normal winter, as well as a 40 percent chance of a drier than normal winter.
Michigan’s total electricity sales in 2015 are expected to decrease by 0.2 percent from 2014 sales, assuming normal weather for the rest of the year, the agency determined. The projected decrease is driven by the industrial sector, whose usage is expected to fall by 4.4 percent, while residential demand is projected to decrease by 0.5 percent. The commercial sector expected to increase by 3.6 percent, it said.
Total natural gas sales are projected to increase by 2.1 percent in 2015 to 859.5 billion cubic feet assuming normal winter weather for the remainder of the year, the agency found. The increase is primarily due to consumption in the electric generation sector, it said.
“In recent years, the electric power industry has begun a shift toward natural gas generation, in part to reduce air pollutants and in part to take advantage of lower fuel costs,” the agency said. “With an expected return to normal winter weather, natural gas consumption for the residential and commercial sectors should fall below 2014 levels.”
The average residential winter natural gas bill for the four largest utilities in Michigan is expected to average $512, an 18 percent reduction from last year.
Michigan propane usage is projected to decrease by 5.8 percent in 2015 assuming normal winter weather for the remainder of the year. Colder than normal temperatures and a concerted effort to promote early fills caused propane use to increase 15 percent in 2014. Propane prices this winter should be the lowest Michigan has seen in many years, the agency said.
U.S. crude oil production averaged 8.7 million barrels per day in 2014, the highest production levels seen in decades. Continued growth is expected through the 2015 calendar year, reaching 9.2 million barrels per day in 2015, but is expected to retreat in 2016 as new investments are reduced in light of current crude oil prices.
Finally, gas sales in Michigan are projected to increase by 2.1 percent in 2015, marking the third-straight year of increased demand. Consumption increases in 2015 are likely due to significant decreases in the retail cost of gasoline that resulted from lower crude oil prices.
In fact, the AAA Fuel Report determined the average price of unleaded gasoline in Michigan was $2.48 on October 1, 2015, down 26 percent from the same time last year when it averaged $3.36.
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