U.S. residential heating oil prices averaged 16% lower than last winter but ended higher

According to the U.S. Energy Information Administration’s (EIA) State Heating Oil and Propane Program (HOPU), the price of residential heating oil averaged $2.86/gal in the United States as of March 29, which is 44 cents/gal higher than at the same time last year. U.S. average residential heating oil prices increased by more than 73 cents per gallon (gal), or 35%, during the 2020–2021 heating season (October 1–March 31). On average, prices were almost 15% lower than last season. Although the increase in residential heating oil prices during the season was the largest on a percentage basis since the 2007–2008 season, prices were almost 15% lower than last season on average. The recent increase in prices is primarily a result of higher crude oil prices and lower distillate inventory levels.

U.S. prices for petroleum products, such as heating oil and propane, tend to follow changes in Brent crude oil spot prices, the most widely used global benchmark crude oil price. The monthly Brent crude oil spot price has been increasing since October 2020, and EIA expects crude oil prices to continue rising through April because of lower OPEC production. Last winter, Brent crude oil prices averaged $57 per barrel, but they have since increased to about $63 per barrel for the week ending March 26, 2021.

Distillate heating oil is the primary home heating fuel in 4.4% of U.S. homes and tends to be more common in the Northeast, according to the U.S. Census Bureau’s 2019 American Community Survey. More than half of the homes in Maine and at least 30% of the homes in New Hampshire, Vermont, Connecticut, and Alaska use heating oil as their primary heating fuel.

Although distillate fuel oil inventories saw typical seasonal withdrawals for winter home heating demand, they remain well above their levels from last year and within the recent five-year average range. As of March 26, total distillate fuel oil inventories in the Northeast (PADD 1A and 1B), where most heating oil is consumed, was 32.7 million barrels, 47% higher than at the same time last year.

EIA’s Heating Oil and Propane Update is published as part of the State Heating Oil and Propane Program (SHOPP), a joint effort between EIA and several state energy offices to collect state-level residential heating oil and propane price data for October through March in states where heating oil and propane use is common.

SHOPP collects residential heating oil prices for 21 states and the District of Columbia and provides wholesale heating oil prices for 25 states. EIA publishes weekly SHOPP price data each Wednesday at 1:00 p.m. Eastern Time on the Winter Heating Fuels and Heating Oil and Propane Update web pages.

Principal contributors: Sean Hill, Marcela Bradbury