As the U.S. heads into winter, home heating oil prices continue to hover near record highs. Colder than expected winter weather, a global oil supply crunch and continued pandemic supply chain issues are delivering sticker shock energy bills for homeowners across the U.S.
If you’re suffering from higher energy bills, consider our range of home energy savings guides, including heat pumps vs solar panels, oven vs air fryer, electric heaters vs radiators, microwaves vs air fryers, wood burning stove vs central heating, fan heaters vs oil heaters, dishwasher vs hand washing, and our audit on how to save on energy bills.
Home heating oil prices: Weekly trajectory
The current national average for heating oil prices stands at $5.147/gallon as of November 28th, according to the U.S. Energy Information Administration. After hitting a historical peak in early November 2022, the price has trended down but remains historically high. Here’s the weekly trajectory since October 2022:
Date
U.S. Heating Oil Price Avg. (USD/Gallon)
11/28/22
$5.147
11/21/22
$5.431
11/14/22
$5.783
11/07/22
$5.902
10/31/22
$5.836
10/24/22
$5.699
Home heating oil prices: Why so high?
Home heating oil prices have more than doubled since a 2000s-era low of $2.06 in the winter of 2015/2016, according to Statista. One year ago, in late November 2021, the average national price sat at $3.36, according to YCharts. Prices now sit above $5, a mark they had never crossed until March of 2022, shortly after Russia invaded Ukraine and kicked off a global energy crunch.
Increasing cold raises demand and therefore prices for heating oil each winter, covering the period from October through March. According to the Energy Information Administration, a homeowner in the Northeast might use 850 gallons to 1,200 gallons of heating oil during a typical winter and consume very little during the rest of the year.
Crude oil accounts for 58% of the price of heating oil, and the war in Ukraine and related energy sanctions on Russia had generally spiked oil prices globally. Additional energy demand from China as it slowly exits Covid-19 lockdowns puts further upward pressure on oil prices. U.S. supply chain issues with availability of tankers and trucks can drive up related oil transportation costs.
Certain U.S. states rely more heavily on heating oil than others, which affects regional prices. The northern Atlantic region, from Maryland up to Maine, relies more on heating oil than natural gas to heat homes, exposing the region more heavily to global oil price fluctuations.
Many of these northeastern states rely on decades-old heating oil tanks and infrastructure. Three fifths of Maine households use oil as their primary energy source for home heating, a larger share than any other state, according to Quartz. This dynamic is one reason residential energy costs are 15.4% higher in the northeast than the rest of the U.S., where energy prices have actually started to fall.
Home heating oil prices: What comes next?
The Energy Information Administration (EIA) expects residential heating oil prices to stay above $5.00/gallon for the rest of 2022. It also expects that these higher heating oil prices and higher consumption due to a colder than average winter will increase heating bills for affected homeowners by 45% compared with last winter.
The Biden administration is considering tapping its reserve of 1 million barrels of heating oil as winter nears and uncertainty over market prices worsens, according to NBC News. The White House is also considering ways to build additional heating oil reserves the administration could release if supply tightens or prices rise again.
The EIA does expect a slightly contracting U.S. economy to reduce heating oil prices during the first half of 2023.
Until then, with elevated energy costs affecting every corner of the U.S., homeowners should strongly consider a home energy audit to find crucial savings on their monthly bills.
