Warmth is on sale this winter, and lower heating expenses could leave plenty of cash left over in some chillier parts of the country for the hot deals retailers are offering this holiday season. 

The crash in oil prices has focused plenty of attention on how much Americans are saving on gasoline. Yet the related decline in some heating fuels – and the likelihood that last winter’s extreme cold won’t return – will deliver a nice windfall for many consumers in the Northeast and Midwest. 

According to a forecast updated this week by the Energy Information Agency, the 6.5 million households that use heating oil – most of them in the Northeast – should save an average of $632 this winter compared to last year. That would amount to a drop of more than 26% – to an average $1,722 – from the record $2,354 the typical heating-oil household paid in the brutal winter of 2013-14.

The slightly smaller number of American homes heated with propane should enjoy a similar percentage savings. The EIA says propane costs in the Northeast should fall by $535 and in the Midwest by $761 compared to a year ago. 

Savings of this magnitude, which are largely spread over just four or five months, could almost pay for the typical splurge on holiday gifts. In a variety of surveys, including one by the National Retail Federation, American consumers say they’ll likely spend an average of about $800 this year on seasonal gifts.

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Most of these savings will come to American radiators by way of collapsing world oil prices. OPEC’s refusal to cut crude-oil output this month, record production from North American wells and soft global energy demand have sent North American crude prices to four-year lows near $60 a barrel. A year ago, crude was above $90. Heating-oil futures – which approximate the wholesale, and not retail, price - were close to $3 per gallon back then and have sunk below $2.10. 

Unfortunately, much slimmer savings are in store for users of the most popular heating fuel in the U.S.: natural gas. 

Natural gas is less a world-traded commodity than crude oil is, and its prices are determined by domestic levels of production, storage and demand. Natural gas prices should be pretty similar to last year’s levels, though they are down 20% from their 2009 peak, which occurred before the fracking boom created the kind of supply bonanza that’s now hitting the crude market. 

While the EIA anticipates natural gas heating bills should dip by 5% this season, all of that is due to forecasts of a less-frigid winter compared to the historic deep freeze last year. The number of “heating degree days” – a measure of heating demand based on how cold it gets for how long in an area – is expected to drop by 12% in the Midwest, 9.5% in the Northeast and 8.6% nationwide. 

Consumer spending boost