Mark Zandi, chief economist at Moody’s Economy.com, estimates that it will cost Americans an additional $22 billion to heat their homes this year compared to last.
So what’s going to be more painful this year: Paying your heating bill, or paying at the pump? That depends, of course. But there’s a good chance you’re going to be cursing your poorly insulated walls more often than you will your gas guzzler this winter.
Credit Suisse breaks it down:
To put the price increases in perspective relative to expenditures at the pump, based on retail gas prices of $3.84 in 2008 (vs. $2.81 in 2007) and an average tank size of 18 gallons, it costs ~$69 to fill a tank (vs. ~$51 LY). With an average of 12,000 miles driven per vehicle and ~19.5 mpg, it costs the average one car family $2,363 at the pump vs. $1,729 LY. At least the ~$69 to fill up the gas tank comes in the form of many little paper cuts, as it is spread over the year. In the Northeast, for example, to heat a home with heating oil it will cost $2,725 on average (vs. $1,987 LY) spread over far fewer (winter) months. This may be more of a deep cut into consumer wallets and psyche this winter.
Using those assumptions, that’s, per household, $634 extra at the pump over the course of a year vs. $738 extra in heating costs over a few months in the Northeast. So how should you play that? CS has some suggestions: The bank has produced a list, based on geographic concentration, of which retail stocks might weather the storm and which are most likely to get hit hard.
Notable retailers with significant home heating cost exposure:
- BJ’s Wholesale Club (BJ)
- Kohl’s (KSS)
- DIck’s Sporting Goods (DKS)
- Staples (SPLS)
- CVS Caremark (CVS)
- Rite Aid (RAD)
- Under Armour (UA)
Notable retailers without significant home heating cost exposure:
- Walmart (WMT)
- Walgreen (WAG)
- Kroger (KR)
- Whole Foods (WFMI)
- Nike (NKE)
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