Home heating oil prices continue to hover near record highs as the U.S. heads into winter. Colder-than-expected winter weather, tighter global oil supplies and ongoing pandemic supply chain issues are driving big energy bills for homeowners across the United States.
If your energy bills are high, consider our range of home energy saving guides, including heat pumps vs. solar panels, ovens vs. air fryers, electric heaters vs. radiators, microwaves vs. air fryers, wood-burning stoves vs. central heating , fan heaters vs oil heaters, dishwashers vs hand washing, and our review of how to save money on your energy bills.
Home Heating Oil Prices: Weekly Track
The current national average price of heating oil is $5.147/gallon As of Nov. 28, according to the U.S. Energy Information Administration. After hitting an all-time high in early November 2022, prices are trending down but remain at all-time highs. Here is the weekly trajectory since October 2022:
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|date||Average U.S. heating oil price ($/gallon)|
Home Heating Oil Prices: Why So High?
Home heating oil prices have more than doubled since the 2000s low of $2.06 in the winter of 2015/2016, according to Statista. A year ago, in late November 2021, the national average was $3.36, according to YCharts. Prices are now above $5, and they won’t break that mark until shortly after Russia invades Ukraine in March 2022 and triggers a global energy crunch.
From October to March, cold weather increases demand, raising the price of heating oil each winter. Homeowners in the Northeast may use between 850 gallons and 1,200 gallons of heating oil in a typical winter and consume very little the rest of the year, according to the Energy Information Administration.
Crude oil accounts for 58% of heating oil prices, with the war in Ukraine and related energy sanctions against Russia generally driving up global prices. Additional energy demand from China has put further upward pressure on oil prices as the country slowly exits Covid-19 lockdown measures. U.S. supply chain issues with the availability of tankers and trucks could drive up associated oil transportation costs.
Certain U.S. states are more reliant on heating oil than others, which affects regional prices. The North Atlantic region, from Maryland to Maine, relies more on heating oil than natural gas to heat homes, making the region more vulnerable to fluctuations in global oil prices.
Many of these Northeastern states rely on decades-old heating oil tanks and infrastructure. According to Quartz, three out of five Maine households use oil as their primary energy source for home heating, a higher percentage than any other state. This dynamic is one reason residential energy costs in the Northeast are 15.4% higher than in the rest of the country, where energy prices have actually started to fall.
Home Heating Oil Prices: What’s Next?
The Energy Information Administration (EIA) expects residential heating oil prices to remain above $5.00/gal for the remainder of 2022. It also expects that higher heating oil prices and increased consumption due to a below-average winter will increase heating bills for affected homeowners by 45 percent compared to last winter.
According to NBC News, the Biden administration is considering drawing on its 1 million barrels of heating oil reserves as winter approaches and market price uncertainty grows. The White House is also considering how to create additional reserves of heating oil that the government could release if supplies tighten or prices rise again.
The EIA does expect a slight contraction in the U.S. economy to lower heating oil prices in the first half of 2023.
Until then, with rising energy costs affecting every corner of America, homeowners should strongly consider getting a home energy audit to save important money on their monthly bills.