Americans like to imagine cuddling up inside their homes on a cold winter's night, but doing that this year could cost them big time - about $3.8 billion more than last year for families in the Northeast that rely on heating oil, a study suggests.
Families that heat their homes with oil face a much more expensive winter. Heating oil costs will be about 50% higher than last winter, the National Energy Assistance Directors Association estimated. That forecast is up from a projection just a few weeks ago for a 31.3% increase, said the nonprofit that represents state directors of the federal Low-Income Home Energy Assistance Program, which assists low-income Americans with energy needs.
Sharply higher costs will affect all 4.79 million households
that use heating oil as their primary heating fuel, but may hit hardest among seniors and others on fixed incomes as well as low-income Americans, NEADA said. It forecasts low-income families in the Northeast alone will spend about an additional $1.1 billion on heating oil this winter.
“Winter is just around the bend, and we are very concerned about what this means for low-income families that use heating oil,” said Mark Wolfe, NEADA executive director. “A 50% increase in heating costs is simply too much for a family living paycheck to paycheck to absorb. Families are already paying more for electricity, food and rent. Now, they are looking at another big increase just to keep their homes warm."
For those on Social Security, an estimated 3.5% cost-of-living-adjustment expected in January "would not come close to covering an increase of this size in heating oil costs," he said.
Why are heating oil prices so high?
Heating oil is basically the same as diesel gasoline. Both are distillate fuels made from the same part of the refining process and are nearly chemically identical. In a pinch, diesel can safely burn in a heating oil furnace or boiler and engines may run on heating oil, experts said.
So, when the price of diesel rises, as it has done amid fighting in Iran and Ukraine, the price of heating oil generally follows, NEADA said. Diesel climbed to a record high just above $6.50 per gallon the week of Sept. 21, according to the Energy Information Administration.
How much more will Americans pay?
Across America, for now, the average cost of heating a home with oil is expected to increase by about $878, to about $2,627 this winter, up from about $1,749 last year, NEADA said. Costs could rise if fuel prices jump again, it noted.
Exact costs will vary by region, it noted. For example, families in the Mid-Atlantic should prepare to spend about $779 more than last year, while families in New England could spend about $1,000 more than last winter. In the Northeast, 82% of homes rely on heating oil.
Among states in those regions, those living in Maine will pay the most, averaging $2,939 this winter, up from $1,664 last year.
Maine has the highest proportion of homes that use heating oil (59%), followed by the rest of New England and Alaska, noted Pavel Molchanov, a Raymond James investment strategy analyst.
For low-income or fixed-income households, these large increases "can mean falling behind on another bill, cutting back on food or medicine, or turning the thermostat down to unsafe levels," Wolfe said.
What's being done?
To keep low-income and fixed-income households safe and warm, NEADA's requesting additional funding for the federal Low Income Home Energy Assistance Program (LIHEAP).
“Winter is almost here, and families have very little time to prepare,” Wolfe said. “We are looking at a 50% increase in heating costs for families that depend on heating oil while electric bills are rising rapidly across the country. That is why we have asked Congress for $3 billion in supplemental emergency LIHEAP funding. Families need help now, before the bills start arriving.”
Meanwhile, the high prices could make these costs a midterm election issue, analysts said. "Amid other cost-of-living frustrations faced by consumers, this issue could play a role in the midterms," Molchanov said.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
This article originally appeared on USA TODAY: Why millions of Americans may have no warm winter nights this year
