Home heating oil prices are set to average $5.26 a gallon this winter, up 34% from last year, the U.S. Energy Information Administration said Tuesday. Even with a warmer winter trimming consumption, households that heat with oil will still pay about 21% more between November and March. Tight global diesel and distillate supplies, concentrated in the Northeast, are driving the increase.
Oil-heated households face a 21% bill jump
Home heating oil is forecast to average $5.26 a gallon this winter, according to the EIA's annual Winter Fuels Outlook. That is because a warmer winter is expected to reduce consumption. As a result, the average household using heating oil is projected to spend $2,115 from November through March, about 21% more than last year.
Households using other fuels face a different picture. Homes heated primarily with natural gas are expected to spend an average of $640 this winter, down 9%. Propane users are forecast to spend $1,246, down 3%. Electricity-heated homes are projected to spend $1,196, up 4% from a year ago.
Tight distillate supplies push prices higher
The increase comes amid an unusually tight global market for distillate fuels, a category that includes both heating oil and diesel. Refinery disruptions in Russia and the Middle East, along with reduced fuel exports from China, have constrained global distillate supplies, and some analysts expect prices to stay elevated through 2027.
Heating oil is used by a relatively small share of households, about 3%, and its use is concentrated in the Northeast. About 3.4 million households in that region rely on heating oil, roughly 82% of the nation's 4.1 million households using the fuel. However, the Northeast is expected to be warmer this winter, and the EIA projects overall heating-oil consumption will fall 9% even as spending on the fuel rises.
State-level prices already running sharply higher
A separate outlook from the National Energy Assistance Directors Association, released in late September, estimated 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 price of a gallon of heating oil was $6.12 as of Oct. 5, up about 73% from $3.53 a year earlier. Maine's most recent survey showed an average price of $5.96, up roughly 79% from $3.33 a year earlier.
Households struggling to cover heating bills may qualify for assistance through the Low Income Home Energy Assistance Program, though eligibility and benefits vary by state.
Source: CNBC
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