Wednesday, December 15, 2021
EIA expects oil-heated homes to spend about $2,115 this winter, up 21%, as tight diesel supplies and Hormuz attacks push heating oil toward $5.26 a gallon.
Households that heat with oil should plan for a bigger bill this winter. The U.S. Energy Information Administration (EIA) expects the average oil-heated home to spend about $2,115 this season, up 21% from last winter. That forecast comes from its Winter Fuels Outlook, released October 6. EIA expects heating oil to average $5.26 a gallon over the season, 34% above last year. These are forecasts as of this month, and they will move with crude prices and the weather.
The squeeze lands hardest in the Northeast. About 3% of American homes heat with oil, and EIA counts roughly 3.4 million of them in the Northeast. The National Energy Assistance Directors Association put the likely jump even higher in September, at more than 31%. That gives oil-heated families a realistic range of a 21 to 31 percent increase. Other heating fuels look calmer. EIA expects homes heating with natural gas to spend 9% less and propane homes 3% less. Electric heating bills are expected to rise about 4%.
The cause is a tight market for distillate, the family of fuels that includes both diesel and heating oil. EIA expects U.S. distillate stocks to sit about 11% below their five-year average this quarter. U.S. distillate exports also rose 20% in the first seven months of the year. The war with Iran keeps pressure on crude. Ship-tracking data from Kpler, cited by CNBC, showed crude moving through the Strait of Hormuz about 40% below normal in the week ended October 7. Over the weekend, Iran's Revolutionary Guard said a supertanker hit a mine. CENTCOM said a US jet disabled a cargo ship trying to run its blockade. Neither claim has been independently confirmed, but each new attack tends to nudge fuel prices up.
For a prepared household, the time to act is before the first cold snap. Check your tank level now and ask your dealer about a budget plan or a fixed price for the season. Many dealers offer one or both, which spreads the cost across months. Seal drafts around doors and windows, and get the furnace serviced so every gallon does its job. If you keep a fireplace or space heater as backup heat, review the basics of preventing carbon monoxide poisoning and put a working CO alarm on every floor.
Plan for the heating bill the way you plan for any other shock to the family budget. Set aside a monthly amount toward heat now, and keep a small reserve for a delivery that costs more than expected. A plan for economic preparedness helps when fuel, food, and heat all climb in the same season. If the bill will strain your budget, contact your state energy office early to ask what heating assistance is available.
Where it stands now: EIA's outlook assumes a milder Northeast winter than last year, so a colder season would push bills higher. Check your tank, your budget, and your backup heat this week. Be Prepared Not Scared!
