Why people in the Northeast will be paying higher heating bills this winter

Northeast households face a costly winter as heating oil prices climb

Provpnadvice.com – Families across the Northeast could see sharply higher home-heating expenses this winter as fuel markets remain under pressure from the U.S.-Iran conflict and the Russia-Ukraine war. The concern is especially acute in a region where heating oil remains a common way to warm homes during cold weather.

Diesel prices are a major part of the problem. Heating oil and diesel are closely linked products, meaning an increase in one generally feeds into an increase in the other. Nearly 5 million U.S. households relied primarily on heating oil during the winter of 2023-24, and 82 percent of those homes were in the Northeast.

That regional concentration leaves many residents of New England and nearby states particularly exposed when fuel costs rise. Households that use natural gas, electricity or propane may also pay more, but heating-oil customers could encounter the steepest jump.

Why diesel matters for home-heating bills

William O’Neil, principal research analyst at S&P Global, said the two fuels historically move in tandem because of their close chemical relationship.

“The price of diesel historically has a pretty strong relationship to the price of heating oil because they’re effectively chemically identical. They just have different additives, different treatments,” O’Neil said.

O’Neil said a rise of roughly $2 per gallon from last winter would not be surprising for consumers in New England. Residential heating oil was priced at roughly $3.75 to $4 per gallon last winter, so that type of increase could lift costs by about 50 percent.

“It would not shock me if Americans or specifically New Englanders are paying something like $2 more per gallon than they were last winter,” O’Neil said. “Residential heating oil prices last winter were something like $3.75 to $4 a gallon, so an additional $2 per gallon on top of that, you’re talking about something in the range of 50 percent higher.”

The National Energy Assistance Directors Association has projected a smaller, though still substantial, rise: 31 percent more for heating oil this winter. Its estimate puts the average household heating-oil bill at $2,297, compared with $1,749 during the previous winter.

Mark Wolfe, the association’s executive director, warned that the projection could prove conservative if diesel continues moving higher. For consumers, the practical issue is not simply the price displayed per gallon. A household buying enough fuel to get through a winter can feel even a modest per-gallon increase in a large seasonal bill.

Higher costs extend beyond heating oil

Heating oil showed the most dramatic increase in the association’s outlook, but broader home-energy costs are also expected to rise. The group projected an average increase of 8.7 percent across home-heating fuels this winter.

Its estimates included a 5.8 percent rise for natural gas, a 9 percent increase for electricity and an 8.7 percent increase for propane. Those differences matter because the Northeast has a varied mix of home-heating systems, and residents may have limited ability to switch fuels before winter arrives.

Fuel purchases also tend to occur early in the season. Wolfe noted that many heating-oil customers normally buy their supply by the beginning of October, potentially bringing the financial impact into focus before the midterm elections. The issue may draw particular attention in Maine and New Hampshire, where competitive Senate contests are taking place.

A heavier burden for constrained household budgets

Rising energy costs can be most disruptive for lower- and middle-income households, particularly when food, medical care, transportation and utility bills are already competing for limited income. Wolfe described the ways higher heating costs can spread through a family’s finances.

“When you have budgets where there’s very little discretionary income, you have to cut back on groceries. You cut back on medicine. Any discretionary activities you don’t do. If you have to, you borrow from payday lenders. Some people fall behind in the utility bills and get shut off from power. It’s a spiraling effect,” he said.

The pressure is compounded by gasoline costs. As of Friday, AAA listed the national average price of gasoline at about $4.47 per gallon, while diesel averaged $6.45 per gallon. For households dependent on driving for work, school, medical appointments or errands, transportation expenses can tighten budgets just as heating bills begin rising.

Wolfe has called for Congress to increase funding for the Low Income Home Energy Assistance Program, known as LIHEAP. The program is intended to help qualifying households manage home-energy expenses. He described the growing challenge as a rapidly developing affordability crisis for the poorest families.

Global disruptions feeding domestic fuel prices

Several international factors are contributing to higher prices for diesel, gasoline and heating oil. Crude oil costs have risen amid conflict-related uncertainty, while attacks affecting refinery operations have added another source of concern. Refineries turn crude oil into the fuels used by motorists, businesses and home-heating customers, so disruptions can affect prices throughout the supply chain.

Tom Kloza, chief oil analyst at Gulf Oil, pointed to disruptions in the Red Sea as an important reason crude prices remain elevated.

“The Houthis were always a wildcard, and now the Houthis are very, very active,” Kloza said.

O’Neil also highlighted uncertainty surrounding the Strait of Hormuz, a strategically important route for oil shipments. Although some movement has continued through the waterway, risks have grown as the conflict has developed. He cited the involvement of the Houthis and strikes on Saudi Arabia’s East-West pipeline, a key route that can move oil for export without requiring passage through the Strait of Hormuz.

For Northeast households, those global developments may feel distant, but their effects can show up quickly in local fuel deliveries and monthly utility bills. With winter heating demand still ahead, families using heating oil may need to prepare for a season in which staying warm costs considerably more than it did a year earlier.