CommoditiesMarket noteWednesday 7 October 2026, 07:11
Heating oil prices are up 34%, and oil-heated homes face 21% higher bills
Heating oil prices will average $5.26 a gallon this winter, up 34%, the EIA says. Oil-heated homes face a 21% higher bill; gas and propane users pay less.
By The Notebook Desk
Heating oil prices are set to make this a much dearer winter for homes that burn oil. US households that heat with oil will pay an average of $5.26 a gallon from November to March, 34% more than last winter, the Energy Information Administration forecast on Tuesday in its Winter Fuels Outlook. Their bill for the season will rise by 21%, to an average of $2,115.
That is the biggest increase for any heating fuel. Homes that heat with electricity face a 4% rise, to $1,196. Homes on natural gas will pay 9% less, about $640, and homes on propane 3% less, about $1,246.
Why heating oil prices are so high
Heating oil is a distillate fuel, the same family as diesel, and distillates are where the oil shock bites hardest. Global production of distillate has dropped because refineries are running less, the EIA says. That has raised international prices, made imports to the US dearer and pulled more US distillate abroad as exports.
The result is low stocks just as winter starts. Distillate inventories on the East Coast, where most heating oil is used, were 32% below their five-year average for the time of year in September, according to the EIA’s Short-Term Energy Outlook for October. The agency expects them to stay about 20% below the 2021–2025 average through the winter.
Crude oil adds to the cost. The EIA raised its forecast for Brent crude to an average of $105 a barrel in the fourth quarter, $14 higher than a month ago. It pointed to the attacks on Saudi Arabia’s East-West pipeline as a sign that oil flows and prices may stay volatile. Its forecast assumes flows from the Middle East stay constrained through the end of the year. US retail diesel averaged $6.29 a gallon in September.
The forecast was finished on 1 October, so it leaves out the G7’s emergency stock release announced the next day. We reported on 4 October that the release puts diesel first, but that much of it had been promised in March.
Who pays the higher heating oil bills
Few Americans heat with oil, and the number keeps falling. About 4.1 million homes use heating oil as their main heating fuel this year, 5% fewer than last year, against about 61.0 million on natural gas and 57.9 million on electricity. That is about 3% of households, mostly in the Northeast, where 3.4 million of them are.
A milder winter there softens the blow. The EIA expects 12% fewer heating degree days in the Northeast than last winter, a measure of how cold it is and so how much fuel a home burns. Oil-heated homes should burn about 402 gallons over the five months, 9% less than last winter, which is why the bill rises by less than the price.
The price should ease as the winter goes on. The EIA’s monthly path starts at $5.79 a gallon in November and falls to $4.84 by March.
Gas and electricity bills this winter
Natural gas was the main heating fuel in 46% of US homes in 2024, Census Bureau data cited by the EIA show, and their bills should fall. The EIA expects the residential gas price to average $13.44 per thousand cubic feet this winter, 9% less than last winter. The biggest fall is in the South, where the gas bill drops 15%, to about $511.
The West is the exception. The EIA expects its winter to be much colder than last year’s unusually warm one, with 25% more heating degree days. Gas bills there rise 7%, and electricity bills 9%.
For electricity, prices rise about 3% on average, to 18.23 cents a kilowatt-hour. Northeast homes pay the most, at 26.19 cents.
What to watch for heating costs
Weather is the biggest risk to the forecast. US forecasters have identified a strong El Niño pattern this winter, which the EIA says could bring large swings in temperature away from its base case. Cold weather raises both the fuel a home burns and, often, its price, and the EIA says such price rises can be sharper when stocks are low, as they are now.
The price of oil-heated winters will also follow the war. The EIA expects Brent to fall to an average of $84 a barrel next year as flows from the Middle East recover, and retail diesel to average about $4.50 a gallon. Many oil-heated homes buy fuel before the winter and refill as needed, the EIA notes, and its forecast assumes they pay the going retail price when they burn it. Heating oil prices are not regulated, so changes in wholesale prices reach households within four to six weeks, the agency estimates.
The EIA will update the Winter Fuels Outlook with its next Short-Term Energy Outlook on 10 November.
Disclosure
This is analysis and opinion, not investment advice.