As the United States heads into winter, home heating oil prices continue to hover near record highs. A colder-than-expected winter, a global oil supply crisis, and ongoing pandemic supply chain issues are driving shocking energy bills for homeowners across the United States.
If you’re suffering from higher energy bills, check out our range of home energy saving guides, including heat pumps vs. solar panels, oven vs. air fryer, electric heaters vs. radiators, microwaves vs. air fryers, wood stove vs. central heating, fan heaters vs. oil heaters, dishwashers vs. hand washing, and our audit on how to save on utility bills. ‘energy.
Heating oil price: weekly trajectory
The current national average for heating oil prices 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, the price has trended lower but remains historically high. Here is the weekly trajectory since October 2022:
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|Date||Average fuel oil price in the United States. (USD/gallon)|
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, at the end of November 2021, the national average price was $3.36, according to YCharts. Prices are now above $5, a mark they never crossed until March 2022, shortly after Russia invaded Ukraine and triggered a global energy crisis.
The increase in cold weather increases the demand and therefore the prices of heating oil each winter, covering the period from October to March. According to the Energy Information Administration, a homeowner in the Northeast might use 850 gallons to 1,200 gallons of fuel oil during a typical winter and consume very little during the rest of the year.
Crude oil accounts for 58% of the price of fuel oil, and the war in Ukraine and related energy sanctions against Russia have generally pushed up oil prices around the world. China’s additional energy demand as it slowly emerges from Covid-19 lockdowns is putting additional upward pressure on oil prices. US supply chain issues related to tanker and truck availability may drive up oil transportation costs.
Some US states are more fuel oil dependent than others, which affects regional prices. The North Atlantic region, from Maryland to Maine, depends more on fuel oil than natural gas to heat homes, thus exposing the region more heavily to fluctuations in world oil prices.
Many of these northeastern states rely on decades-old fuel oil tanks and infrastructure. Three-fifths of Maine households use fuel oil as their primary energy source for home heating, a higher share than any other state, according to Quartz. This dynamic is one of the reasons why residential energy costs are 15.4% higher in the Northeast than in the rest of the United States, where energy prices have actually started to decline.
Heating oil prices: what next?
The Energy Information Administration (EIA) expects residential fuel oil prices to remain above $5.00/gallon for the remainder of 2022. It also expects these higher fuel oil prices and this higher consumption due to a colder than average winter will increase the heating bills of the owners concerned. 45% compared to last winter.
The Biden administration plans to tap its 1 million barrel reserve of fuel oil as winter approaches and market price uncertainty mounts, according to NBC News. The White House is also considering ways to build up additional reserves of fuel oil that the administration could release if supply tightens or prices rise again.
The EIA expects a slightly contracting US economy to reduce heating oil prices in the first half of 2023.
Until then, with high energy costs affecting every corner of the United States, homeowners should seriously consider a home energy audit to find crucial savings on their monthly bills.
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