US heating oil bills projected to rise 21% this winter, EIA outlook says

Home heating oil prices are expected to average $5.26 a gallon during the winter heating season, up 34% from last winter, according to the U.S. Energy Information Administration's annual Winter Fuels Outlook released Tuesday. The agency projects the average household using heating oil will spend $2,115 from November through March, about 21% more than last year. The EIA also predicts a warmer winter, which may reduce consumption. Actual bills will depend heavily on the weather, since colder temperatures increase energy use even if fuel prices stay unchanged.

Andy Lipow, president of Lipow Oil Associates in Houston, said the consumer "is going to be facing some severe sticker shock when the delivery company fills up their tank to get ready for the colder weather." Lipow said the increase comes amid an unusually tight global market for distillate fuels, a category that includes heating oil and diesel, which he said are generally the same product. 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, CNBC reported. CNBC also reported that some analysts expect prices to remain elevated through 2027.

The EIA forecast that homes heated mainly with natural gas would spend an average of $640 this winter, down 9%, while propane users would spend $1,246, down 3%. Households using electricity for heating are estimated to spend an average of $1,196, up 4% from a year ago.

Heating oil is used by about 3% of US households, and its use is heavily concentrated in the Northeast, government data shows. About 3.4 million households in that region rely on heating oil, roughly 82% of the nation's 4.1 million heating-oil households. The EIA expects the Northeast to be warmer this winter and projects overall heating-oil consumption will fall 9% even as spending on the fuel rises.

The National Energy Assistance Directors Association, which represents state energy assistance officials who administer the federal Low Income Home Energy Assistance Program, released a higher estimate in late September. The group projected the average cost to heat a home with oil would rise about 50% this winter, to $2,627 from $1,749 last year. Mark Wolfe, the group's executive director, said prices can vary from state to state and even within states. "Shopping around does pay off," Wolfe said.

In Massachusetts, the average retail cost of a gallon of heating oil was $6.12 as of 5 October, 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. The Energy Department says lowering the thermostat while away from home or while sleeping can reduce energy use.