Heating Oil Bills Set to Jump 21% This Winter, EIA Forecasts

A winter with two very different price paths

The Energy Information Administration's 2026–27 Winter Fuels Outlook, released October 6 alongside its monthly Short-Term Energy Outlook, says American households will see very different heating costs this winter depending on how they heat their homes. The agency expects homes that rely mainly on natural gas or propane, about half of all U.S. households, to spend less than they did last winter. Homes heated mainly by electricity or heating oil are expected to spend more.7

Heating oil customers face the biggest increase. The EIA projects their spending will rise about 21% from last winter. Most of these households are in the Northeast, and they make up roughly 3% of U.S. homes.13 For the November-through-March season, the agency puts the average bill at $2,115. That assumes heating oil averages $5.26 a gallon, up 34%, while households burn 9% less fuel than last year.9 A milder Northeast winter is what keeps the bill increase below the price increase.7

The other fuels look very different. The EIA expects spending in gas-heated homes to fall 9% and in propane-heated homes to fall 3%, while spending in electrically heated homes rises 4%.12 The 21% headline matters a great deal to a small group of households. For most of the country, energy costs are a story about electricity.

Why distillate markets are driving the increase

Heating oil is chemically very close to diesel, and the market for both, known as distillate, is tight. The EIA says global distillate production has fallen as refineries cut output. That has raised the cost of imports and increased foreign demand for American fuel, leaving U.S. stocks low going into winter.9 In the first seven months of 2026, U.S. distillate exports were up 20% from a year earlier, with much of the extra fuel going to Europe.13

The shortage is worst on the East Coast. Distillate inventories there were 32% below their five-year seasonal average in September, and the EIA expects them to stay 20% to 30% below average all winter.2 The region uses more distillate than its own refineries produce, so it depends on pipeline shipments from the Gulf Coast, tankers, and imports that mostly come from Canada and peak between December and February.12

The news coverage is more direct about geopolitics than the EIA's own text. Bloomberg and Investing.com both connect the jump in diesel prices to the US-Iran war and to Ukrainian drone strikes on Russian refineries.614 The EIA's figures fit that account. Brent crude averaged $114 a barrel in September, $23 more than in August, and the agency raised its fourth-quarter Brent forecast by $14, to $105.2 It also expects retail diesel to stay above $6 a gallon through October.14

Retail prices in the heaviest-use states are already high. Maine heating oil hit $5.96 a gallon in late September, almost 80% above a year earlier.14 Another report put Maine's late-September average at a record $6.02.11

Where the estimates disagree

The largest disagreement is over how big the heating oil increase will be. The EIA's base case is 21%, with an uncertainty range of about 15% to 35%.5 The National Energy Assistance Directors Association (NEADA), which represents the state officials who run heating aid programs, expects a bigger hit: about $2,625 for the average oil-heated household, up roughly $875 from last winter. Its executive director, Mark Wolfe, said his group is less confident than the EIA that heating oil prices will come down quickly, pointing to low inventories, the war, and uncertain weather.11

Even the size of the price increase was reported inconsistently. Investing.com described it as 30%.14 The EIA updated its press release on October 6 to clarify the price figure, which it describes as an increase of more than 30%.7 Its detailed tables show 34%.9

There are two practical reasons to think the actual figure will land closer to NEADA's estimate than the EIA's. First, the agency locked its model inputs on October 1, so later market moves are not included. Its next update is due November 10.12 Second, the forecast assumes a warmer Northeast, and a strong El Niño could produce large swings away from that assumption.9 Some coverage calls this El Niño potentially the strongest on record and compares it to 1997, when unusual weather cut national heating costs by about 10%.3 Weather could still help. But the 21% figure depends on mild weather, while NEADA's higher number reflects what happens if supply stays tight.

One caveat applies in both directions. The EIA assumes households pay the going retail price at the moment they burn the fuel. Its estimates do not account for oil bought in advance or locked in through a contract before winter.1 Customers who prebought fuel may pay less than the forecast. Those who buy one delivery at a time will pay whatever the market charges.

Electricity rates: a smaller increase that affects more homes

The 4% rise for electrically heated homes looks minor next to heating oil, but it covers far more people. The EIA says more than 40% of homes heat mainly with electricity. It expects a 3% rise in residential power prices plus slightly higher usage.1 The increase is largest in the West, where colder weather pushes electric heating bills up 9%. The Northeast is the exception, with a projected 3% decline.3

That seasonal forecast comes on top of rates that have been climbing for years. EIA data show the average U.S. residential price was 18.31 cents per kilowatt-hour in July 2026, 4.9% higher than a year earlier.33 One analysis found residential prices rising faster than residential electricity sales, 4.9% against 1.0%. That suggests households are paying more mainly because of higher per-unit charges, not because they are using more power.27 Over 12 months, New York's residential rate rose 14%.30 In wholesale markets, the EIA expects 2026 prices in the PJM region, which covers much of the Mid-Atlantic and part of the Midwest, to rise 41%.2

The agency also cautions that its electricity numbers include all household power use during the winter months, not only heating, so the bill it describes covers more than keeping the house warm.12

Heating assistance and rebates are not keeping up

Federal aid has not grown to match the higher costs. Funding for the Low Income Home Energy Assistance Program (LIHEAP) was about $4.1 billion in fiscal 2026, and states are running at roughly last year's level. Wolfe estimates that if heating costs rise about 8% overall and states keep benefits unchanged, the program would reach the equivalent of 450,000 to 500,000 fewer households.11 For fiscal 2027, the White House proposed no LIHEAP funding at all, while the House Appropriations Committee approved about $4.06 billion.17 Many states pay between $200 and $1,000 a season.17 Wolfe pointed out that an extra $875 on a heating oil bill could be larger than an entire LIHEAP benefit in some states.11

Some states are adding their own money. Massachusetts Gov. Maura Healey declared a State of Energy Emergency and announced nearly $150 million in relief. It includes a first-time heating oil benefit for middle-income households earning 60% to 100% of state median income, and a 20% increase in assistance for low-income households that heat with oil. She also asked Congress for another $3 billion for LIHEAP.16

For homeowners thinking about replacing their heating systems, the picture has become less clear. Federal guidance has changed, and trade sites contradict each other. One rebate tracker reports that the federal 25C and 25D tax credits ended for work done after December 31, 2025. It also says a Department of Energy notice that took effect May 29, 2026 restricted the HEAR program to electric-to-electric upgrades, which ends rebates for switching from fossil fuels.42 Some consumer guides still list an $8,000 HEAR rebate for replacing an oil system with a heat pump35, and at least one still describes the 30% federal credit as available.39 The reports of the policy change are more specific and better documented, and homeowners should treat those older claims as outdated until their own state program confirms otherwise.

State and utility programs are now the main source of help. In Massachusetts, the Mass Save whole-home heat pump rebate tops out at $8,500. In one installer's example, a $23,000 oil-to-heat-pump conversion still left the homeowner paying $14,500.38 New York's Clean Heat program pays a flat $7,000 for a whole-home system that removes the old fossil-fuel equipment, with more money for weatherized homes.41 These remain large projects that take time. The EIA itself warns that households should not assume switching to a fuel with lower average spending in its report would cut their own bills.4

The bottom line

This is not a broad heating crisis. It is a fuel-specific price shock that hits hardest in parts of the Northeast and Mid-Atlantic where many homes burn oil, and it comes on top of electricity rates that have been rising steadily. Gas customers will mostly get some relief. Oil customers are at the mercy of global distillate markets, and their aid programs and rebates are flat or shrinking. The November 10 update will show whether the EIA's mild-weather assumption holds up. Until then, NEADA's higher estimate is the more cautious one to plan around.