Americans who heat their homes with oil are expected to face sharply higher costs this winter, even as households that rely on natural gas or propane may get some relief.
Home heating oil prices are expected to average $5.26 a gallon during the winter heating season, up 34% from last winter, according to details in the U.S. Energy Information Administration's annual Winter Fuels Outlook released Tuesday. But the agency also predicts a warmer winter, which may reduce consumption. Given that combination, the average household using heating oil is projected to spend $2,115 from November through March, about 21% more than last year.
"The consumer, unfortunately, is going to be facing some severe sticker shock when the delivery company fills up their tank to get ready for the colder weather," said Andy Lipow, president of Lipow Oil Associates in Houston, a consulting firm that specializes in refinery operations.
The increase comes amid an unusually tight global market for distillate fuels, a category that includes heating oil and diesel, which generally are the same product, Lipow said. Refinery disruptions in Russia and the Middle East, along with reduced fuel exports from China, have constrained global supplies of distillate fuels and put upward pressure on prices — which some analysts expect to remain elevated through 2027.
Households using other fuels for heating face better news. Homes primarily heated with natural gas are expected to spend an average of $640 this winter, down 9%, while those using propane are forecast to spend an average of $1,246, down 3%. For households using electricity for heating, the estimate is an average of $1,196, up 4% from a year ago.
Heating oil is used by a relatively small share of households — about 3% — and its use is heavily concentrated in the Northeast, government data shows. About 3.4 million households in that region rely on heating oil, accounting for roughly 82% of the nation's 4.1 million households using heating oil.
Actual heating bills will depend heavily on the weather. Colder temperatures increase the energy households use even if fuel prices remain unchanged.
However, the Northeast is expected to be warmer this winter, according to the EIA outlook. That suggests overall heating-oil consumption will fall 9% even as spending on the fuel jumps, according to the EIA.
A more dire outlook was released in late September by the National Energy Assistance Directors Association, which represents state energy assistance officials who administer the federal Low Income Home Energy Assistance Program. The group estimated that the average cost to heat a home with oil would jump about 50% this winter, to $2,627 from $1,749 last year.
In Massachusetts, the average retail cost of a gallon of heating oil was $6.12 as of Oct. 5, up about 73% from $3.53 a year earlier, according to the state's weekly fuel survey. Maine's most recent survey shows an average price of $5.96, up roughly 79% from $3.33 a year earlier.
Prices can vary from state to state and even within states, said Mark Wolfe, executive director of the NEADA. For consumers, this means it may be worth comparing oil companies' prices. "Shopping around does pay off," Wolfe said.
Consumers can take some steps to limit their heating costs, regardless of which fuel they use, according to the Energy Department. For instance, lowering the thermostat while away from home or while sleeping can reduce energy use, while sealing air leaks around windows and doors and maintaining heating equipment can also help lower consumption.
Households struggling to pay heating bills may qualify for assistance through LIHEAP. Eligibility and benefits vary by state.
"There's a lot of concern about people on fixed incomes," Wolfe said.
A group of Democratic senators and Sen. Bernie Sanders, I-Vt., sent a letter last week to Robert F. Kennedy Jr., secretary of the U.S. Health and Human Services Department, asking that he seek at least $3 billion more in funding for LIHEAP.
