Tetra Images | Photo Disc | Getty Images
Households that rely on natural gas or propane may get some relief, but Americans who heat their homes with oil are expected to face steep cost increases this winter.
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 from the U.S. Energy Information Administration’s annual Winter Fuel Outlook released Tuesday. But officials also predict a warmer winter could lead to a decline in consumption. Considering this combination, the average household using heating oil is expected to spend $2,115 from November to March, an increase of about 21% from last year.
“Unfortunately, consumers are going to face a serious shock as shipping companies fill up their tanks for cold weather,” said Andy Lipow, president of Lipow Oil Associates in Houston, a consulting firm that specializes in refinery operations.
Kerosene and diesel supplies will be limited
The increase comes amid an unusually tight global market for distillate fuels, a category that generally includes the same products heating oil and diesel, Lipow said. Disruptions at refineries in Russia and the Middle East and a decline in fuel exports from China have limited global supplies of distillate fuels and put upward pressure on prices, although some analysts expect prices to continue rising through 2027.
There is good news for households that use other fuels for heating. Homes heated primarily with natural gas are expected to spend an average of $640 this winter, down 9%, while those using propane are expected to spend an average of $1,246, down 3%. Households that use electricity for heating are estimated to spend an average of $1,196, an increase of 4% from a year ago.
According to government data, the proportion of households using kerosene is relatively low, around 3%, and use is concentrated in the northeast. Approximately 3.4 million households in the region rely on kerosene, accounting for approximately 82% of the 4.1 million households using kerosene nationwide.
Actual heating costs greatly depend on the weather. As temperatures drop, households use more energy, even if fuel prices remain the same.
However, the Northeast is expected to be warmer this winter, according to the EIA outlook. According to the EIA, this suggests a 9% decline in overall heating oil consumption, even as fuel spending soars.
Some state-level prices increase by more than 70%
The National Energy Assistance Directors Association, which represents state energy assistance officials who administer federal low-income residential energy assistance programs, announced an even more dire outlook in late September. The group estimates that the average cost to heat a home with oil will jump about 50% this winter, from $1,749 last year to $2,627.
The average retail price of a gallon of heating oil in Massachusetts was $6.12 as of Oct. 5, up about 73% from $3.53 a year earlier, according to the state’s weekly fuel survey. The latest Maine survey found the average price was $5.96, up about 79% from $3.33 a year ago.
Prices can vary from state to state and even within a state, said Mark Wolfe, executive director of NEADA. For consumers, this means it may be worth comparing oil companies’ prices. “Shopping always pays off,” Wolf says.
According to the Department of Energy, consumers can take steps to limit their heating costs, regardless of the fuel they use. For example, lowering your thermostat while you’re out and about while you’re sleeping can help reduce energy use, and sealing air leaks around windows and doors and maintaining heating equipment can also help reduce consumption.
Households struggling to pay their heating bills may be eligible for assistance through LIHEAP. Eligibility and benefits vary by state.
“There’s a big concern about people on fixed income,” Wolf said.
A group of Democratic senators and Sen. Bernie Sanders (I-Vt.) sent a letter to U.S. Department of Health and Human Services Secretary Robert F. Kennedy Jr. last week asking him to seek at least $3 billion in additional funding for LIHEAP.
