Predicting heating oil and gas prices is tough in such a volatile market, but it seems that one thing right now is certain: homeowners should expect to pay significantly more to heat their home this winter compared to years prior.
What's Causing the Rise in Heating Oil Prices?
And what should I expect to spend this winter?
Energy Secretary Jennifer Granholm stated Sunday that Americans should expect to pay higher home heating costs this winter due to the high gas prices caused by the pandemic.
Prices have also been increasing due to a severe shortage of fossil fuel energy sources resulting in deep inventory draws. Analysts predict that prices for oil, coal, and natural gas will remain at multi-year highs as temperatures drop. Louise Dickson, senior oil markets analyst at Rystad Energy, expects that supply will not catch up with demand until the end of 2022.
According to a report from the EIA released last month, homeowners of the four percent of U.S. households with oil heat should expect to spend about 43 percent more on heating bills this year than they did last winter. This is compared to a 30 percent increase for gas heat and a six percent increase for electric heat.
In addition to the pandemic and supply shortage, this increase is partly due to the fact that government officials expect this winter to be "slightly colder than last year in much of the United States." In the event that it is indeed a colder winter, heating bills for oil could rise even higher than the expected 43 percent jump to a 59 percent increase compared to last year. If it's a warmer winter, it could drop down to 30 percent, according to the report.
So what do these percentages actually equate to? Government officials said they expect homeowners to spend an average of $1,734 on warming their homes with heating oil.
What can I do to lower my heating bill?
The next important question is what homeowners can do to alleviate these soaring prices. A short-term solution is bundling up more when at home, but that only gets you so far.
Some long-term solutions include using solar power, adding insulation to your home, or getting an energy audit to find out what you can do to save energy and money. You could also install a smart thermostat, which allows for more precise heating and less wasted energy.
A bigger investment is installing an electric heat pump system to lessen your dependence on oil or to switch from oil heat altogether.
If you're not sure where to start, reach out to your local HVAC company to see what the best options are.