The US Energy Information Administration released its Winter Fuels Outlook on October 6 with what it called a mixed picture for winter fuel costs, but the headline number is stark: households whose primary space heating fuel is heating oil — about 3 percent of US households, located mostly in the Northeast — are expected to pay about 21 percent more than last winter. Some of the forecast 30 percent increase in heating oil prices is offset by milder Northeast weather, the agency said.
The independent National Energy Assistance Directors Association is gloomier. NEADA’s September 14 winter heating report projects heating oil costs rising 31.3 percent, “largely because of the sharp increase in heating oil prices driven by the war in Iran.” Across all fuels, NEADA expects the average household to spend $1,030 on heating this winter, up $82 or 8.7 percent. Electric-heat households face a 9.0 percent increase and natural gas 5.8 percent, while the EIA expects gas and propane households — about half of all households — to actually spend less than last winter.
The drivers are crude and distillate tightness together. Brent averaged $114 a barrel in September, $23 higher than August, and the EIA forecasts $105 in the fourth quarter, $14 above last month’s forecast, as Middle East disruptions drain inventories and tight diesel markets keep prices high. East Coast distillate inventories were 32 percent below their five-year seasonal average in September and are forecast to stay 20 to 30 percent below average through the winter. Retail diesel averaged $6.29 a gallon in September and is expected to remain above $6 in October before easing toward about $4.50 on average in 2027.
The EIA’s working assumption is that Middle East workarounds expand: it expects oil production and exports from the region to gradually increase with facilitated Strait of Hormuz transits, alternative routes and ship-to-ship transfers, cutting crude shut-ins from 4.5 million barrels a day in the fourth quarter to 2.7 million in the first quarter of 2027. If that recovery stalls, the winter fuel numbers get worse from here.