U.S. Residential Heating Oil Prices Higher Year-on-Year as Winter Heating Season Starts

U.S. heating oil prices were 65 percent higher during October 2022, compared to October 2021, according to a Nov. 17 report from the U.S. Energy Information Administration. Moreover, residential heating oil prices increased to a yearly record of $5.90 per gallon on Nov. 7, 2022, due to a combination of tight storage inventories, low imports, and limited production capacity.

Distillate fuel oil stocks at refineries, bulk terminals, and gas facilities in New England states were at their lowest level in a number of years as of June 2022, according to the agency’s Petroleum Supply Monthly, and this created potential supply concerns leading into the winter period and was reflected in higher pricing during October. The latest Weekly Petroleum Status Report reported that Northeast distillate fuel inventories amounted to 15.2 million barrels, 44 percent lower year-on-year, as of Nov. 11, 2022.

U.S. residential heating prices have been further boosted by reduced production capacity, with the Philadelphia Energy Solution refinery, shutting down indefinitely in 2019, as a result of fire damage.  This has contributed to regional refining capacity declining in recent years despite East Coast refineries operating at nearly full capacity.

Heating oil is the main home heating fuel in 4.1 percent of U.S. homes, with New England having the highest proportion (33 percent) of homes predominantly using heating oil for heating their homes. In its November edition of the Winter Fuels Outlook, the agency projects that U.S. homes that use heating oil as their main source of heating will pay 45 percent more on average this winter, compared to last year due to elevated retail heating oil prices and higher projected consumption.