As winter approaches, small business owners should brace for rising energy costs this season, according to a recent analysis by the U.S. Energy Information Administration (EIA). The EIA’s latest estimates indicate that residential energy expenditures for the winter months—November 2025 through March 2026—are expected to increase significantly, driven by forecasts of colder weather and higher retail energy prices, particularly for natural gas and propane.
The EIA traditionally publishes a Winter Fuels Outlook each October, detailing forecasts for energy consumption, prices, and expenditures across all U.S. households. This year, the agency has revised its forecasts, suggesting that business owners should prepare for potential impacts on operating costs, primarily if they rely on natural gas or propane for heating.
"In October, we predicted a slightly warmer winter; now we’re expecting temperatures similar to last winter," said Owen Comstock, the principal contributor to the report. “Weather conditions are critical in shaping energy demand and prices. Our most recent models reflect a significant shift.”
The data indicates that this December is predicted to be about 8% colder than the average of the previous ten years. This change underscores the importance for small business owners to reassess their energy strategies. With wholesale natural gas prices climbing from approximately $3.00 per million British thermal units (MMBtu) to over $4.00/MMBtu by late November, businesses should expect higher utility bills and consider how this will affect budgets.
Retail propane prices have also hit new highs, despite wholesale costs being at least 10% lower than last winter’s. This discrepancy suggests that supply and demand dynamics could be unstable, leaving small business owners to navigate fluctuating energy expenses over several months.
Energy is essential for running day-to-day operations in many sectors, and increased costs can squeeze profit margins, especially for small enterprises that may lack the financial buffer larger companies typically enjoy. For example, local restaurants, retailers, and service providers using natural gas or propane for heating could find their cost structures affected, potentially prompting price adjustments or budget reallocations.
In response to these pressures, small businesses might consider the following strategies:
-
Energy Efficiency: Investing in energy-efficient appliances and insulation can reduce consumption over time, mitigating some of the cost impacts.
-
Budget Planning: Seasonal fluctuations necessitate careful budget planning. Business owners should account for potential increases in energy costs during the colder months.
- Alternative Energy Sources: For those currently relying on natural gas or propane, exploring renewable energy options or electric heating systems may provide savings in the long run, as initial investment may be offset by reduced ongoing costs.
With an increased focus on sustainability, businesses that transition to alternative energy sources could also appeal to environmentally conscious consumers, adding another layer to the financial benefits.
Balancing rising operational costs could pose a challenge, especially as customer demand remains critical for growth during the holiday season. Retailers, in particular, may need to navigate price increases delicately to maintain sales momentum without alienating customers.
The EIA’s forecasts underscore the importance of staying updated on energy market trends. Each month, the EIA releases updated forecasts based on actual weather, energy prices, and their Short-Term Energy Outlook (STEO), which can help businesses make informed decisions on energy procurement and management.
With the potential for colder weather and rising retail energy prices, small business owners are encouraged to not only brace for changes but also to proactively strategize. The latest insights from the EIA provide a timely reminder of the influence that energy costs can have on operations.
For more detailed forecasts and trends, check the original EIA report here. The winter may still hold some surprises, and being prepared could ensure that small businesses weather the season successfully.
Image Via BizSugar
