Heating oil, a variation of distillate fuel oil or diesel, is the primary space heating fuel for 3% of U. S. households. EIA expects these homes will spend 8% less on heating oil this winter than last. More than 80% of the homes that use heating oil as their main heating fuel are in the Northeast.
Even though EIA publishes heating oil consumption as a U. S. average, the lack of consumption outside of the Northeast means the U. S. average heating oil price is heavily weighted toward the Northeast and corresponds closely to the Northeast regional average price.
Data source: U. S. Energy Information Administration, Winter Fuels Outlook
Lower heating oil prices and less heating oil consumption drive lower heating oil expenditures in EIA’s base case forecast. EIA estimates that U. S. households that use heating oil for space heating will consume an average of about 400 gallons (gal) of heating oil this winter, or 4% less than last winter. It is expected that heating oil prices will average about $3.50/gal, 4% less than last winter. At this price, homes that primarily heat with heating oil will spend an average of $1,390 this winter.
In the colder case, it is expected that the average household using heating oil as its primary heating fuel will consume 4% more heating oil than last winter. Although EIA expects heating oil prices will be 3% less than last winter in that case, the increase in consumption means heating oil expenditures would be 2% more than last winter. Conversely, in the warmer case, EIA estimates that heating oil consumption would be 10% less than last winter and prices 5% lower, resulting in expenditures decreasing by 15% from last winter.
Lower heating oil prices reflect lower crude oil prices this winter. However, EIA forecasts this drop in crude oil prices will be partly offset by wider crack spreads for distillate fuel. Crack spreads broadly indicate refiners’ margins and are calculated by subtracting the price of crude oil from the wholesale price of a petroleum product. It is expected that crack spreads will increase this winter relative to last winter. For consumers, wider refining margins translate to higher prices for petroleum products. l FON
Data source: U. S. Energy Information Administration, Short-Term Energy Outlook Data values: U. S. Petroleum and Other Liquids Supply, Consumption, and Inventories