Winter’s Electricity Price Spike
The US Energy Information Administration has just released its forecast for winter energy prices. Called the Winter Fuels Energy Outlook Winter 2025-2026 (November 2025 to March 2026), it shows that most energy prices will fall for the period. Electricity is an exception. The experts believe prices will rise by 4%, while propane prices will fall by 8% and fuel oil prices will fall by 8%.
Electricity use varies considerably by region. It accounts for 11% of fuel use in the West, 34% in the South, 7% in the Midwest, and 4% in the Northwest. And the forecast has a spread. There are a mid-case, a high case, and a low case.
Several factors are not included in the calculation or are only partially included. One is that some utilities will try to raise rates more than others. In most cases, this will be demand-based. Early forecasts show this will be due to the buildout of AI data farms. Because this has become a political issue in some areas, requests for increased utility services may be rejected.
AI Will Play Role
The price of oil is dropping much faster than most forecasts showed. Urid oil has dropped 20% from the start of this year. The US and OPEC+ are pumping at historically high levels. US producers have started to lose money when crude is below $60. OPEC+ may continue to pump to pick up the market share it has lost to the US.
Renewables may have some effect on electricity, but no one knows for certain how much will come online. The Trump Administration has put the brakes on part of this effort.
Averages are misleading, and therefore, the 4% is as well.
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