Heating oil users face the winter's steepest bill increase as fuel supplies tighten

US households that heat with oil face winter bills about 70% higher than last year, the National Energy Assistance Directors Association (NEADA) projected in a report covered on Wednesday by the Guardian and the New York Times. Residential heating oil averaged $6.138 a gallon on November 2, $2.506 more than a year earlier, according to the US Energy Information Administration (EIA).

A national rise of about 7%, and a much larger one for oil

Average heating costs across the country are projected to climb more than 7% this winter, NEADA said, according to the Guardian, with households that use heating oil, mostly in the Northeast and Alaska, facing the biggest increases. Nearly 5 million households use the fuel, and their seasonal cost could rise about 70% to roughly $2,977, the newspaper reported. The New York Times, in its business news feed, also put the national average rise at 7% and the increase for heating oil users at around 70%.

Other fuels rise far less. Electric heating costs could increase about 6% to $1,215 and propane bills about 5% to an average of $1,350, the Guardian reported. In the Northeast, the average heating bill is projected to rise 16.9%, or $221, to $1,532 from $1,311 last winter.

NEADA linked the increase to fuel supplies tightened by the US-Israel war with Iran and Russia's war in Ukraine, according to the Guardian. Mark Wolfe, NEADA's executive director, said in a statement that "continued uncertainty about global oil supplies makes it difficult to predict where prices will go."

The oil estimate has risen twice since September

NEADA's first outlook for the winter, on September 14, projected an average heating bill of $1,030, up 8.7%, with heating oil costs up 31.3%. Two weeks later it raised the heating oil estimate to about 50%, from about $1,749 last winter to about $2,627. Measured against that $1,749 base, a bill of $2,977 would be 70.2% higher, a figure computed from the two NEADA estimates.

The national figure moved the other way, from 8.7% in September to a little over 7% now. The September release said a warmer winter expected because of El Niño would reduce demand for heat, which helps households that heat with gas or electricity more than those whose fuel price has jumped.

Retail oil prices sit near $6 a gallon

The EIA's weekly price survey shows where retail prices stand. The national average residential heating oil price of $6.138 a gallon on November 2 was 9.2 cents lower than a week earlier. Against a year earlier it was 69.0% higher, a change computed from the EIA's figures. Residential propane averaged $2.820 a gallon, 37.5 cents more than a year earlier.

About one in six US households are already behind on utility payments, owing about $23 billion in total, NEADA reported, according to the Guardian. NEADA asked Congress in September for $3 billion in emergency funding for the Low Income Home Energy Assistance Program (LIHEAP), its heating-oil release said.

Fuel type, more than the thermostat, decides this winter's bill

Our reading is that this winter splits households by the fuel they burn rather than by how carefully they budget. A family heating with gas or electricity faces a rise near the national 7%; a family on heating oil faces a jump that NEADA has already revised up twice, and retail prices close to $6 a gallon give little sign of a reversal so far.

The threat is concentrated: older homes in the Northeast, fixed incomes and households already behind on utility bills. The opportunity, if the El Niño forecast holds, is lower demand that limits how many gallons a household needs. We expect oil-heated households to carry the largest increase if prices stay near current levels; that view would change if the weekly EIA price fell back toward $5 a gallon before the coldest months.

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