Heating oil prices: Why is home heating oil so expensive?

Get a clear explanation of why heating oil prices are so high in this guide.

Get a clear explanation of why heating oil prices are so high in this guide.

Heating oil prices are really expensive—especially this winter. 

We all love to be toasty and warm during the colder months, but at what expense? 

If you use heating oil, you’re spending plenty of money on high home heating fuel costs already—and you might still end up feeling chilly or uncomfortable indoors, no matter what temperature you set the thermostat at.

In this guide, you’ll cover:

If you’re worried that you’ll need to wear double and triple layers inside this winter, don’t fret: There are better solutions to paying for expensive oil heat—yes, even while energy prices are soaring.

With alarming headlines like “The U.S. Northeast is hurtling toward a winter heating crisis” and experts talking about rationing heating oil due to shortages, now is the time to make the switch to an electric heat pump if you can. 

At Sealed, we make converting from oil heat to an energy-efficient heat pump not only hassle-free, but also super comfy. Discover how.

Why is heating oil so expensive?

There are a few factors that cause heating oil to be so expensive:

  • The price of crude oil 
  • Heating oil refining and production costs
  • The cost to distribute and deliver heating oil safely to consumers
  • Increase in unpredictable weather and colder winters
  • Competition between suppliers in your local market (1, 2)

But heating oil is extra expensive this year. 

According to a statement by the U.S. Energy Information Administration, “Higher heating oil prices and consumption, due to colder forecasted temperatures this winter, result in our expectation that… [consumers] will see expenditures increase by 45% compared with last winter.” (3)

That’s a painful increase. 

It’s important to know that the basic concept of supply and demand is also at play in driving higher prices.

“The facts are this: Supplies of heating oil are historically low,” said Michael Ferrante with the Massachusetts Energy Marketers Association in a report by The NH Journal (4).

The reason?

The price of fossil fuels (like heating oil) is highly dependent on supply, which is affected by geopolitical factors, global market, and weather.

In general, energy costs have increased due to pandemic-related labor shortages, the political conflict in Europe, and colder winters and hotter summers. 

If you’re seeing big spikes in your heating costs, read Why is my heating bill so high? to dig in (and get crucial tips for saving energy). 

You’ll likely see heating oil expenditures increase by 45% compared with last winter.

U.S. Energy Information Administration
exterior of modest two-story home in snow and ice dams on roof

Heating oil costs: Average home heating oil price for 2022-2023 winter

The U.S. average price of home heating oil for this winter is $4.54 per gallon (5). However, in some areas, it’s even more expensive. 

At the start of November 2022, the average price of heating oil in New York State was $6.02 per gallon, while the heating oil prices in Ohio were quickly approaching $6 per gallon as well (6, 7).

The cost of heating oil has pretty much doubled over the last two years—if not more than doubled in some areas. 

And using heating oil is the most expensive way to heat a home.

That’s why so many homeowners are working toward switching from oil heat to an electric heat pump and saying goodbye to oil furnaces and boilers for good.

How to lower your heating oil use

If you want to keep using heating oil to heat your home (although we don’t recommend it—more on why below), one of the best ways to conserve the amount you use is through whole-home weatherization. 

Weatherizing your home with high-performance insulation and professional air sealing works to keep the warm, heated air you pay for inside your house where it belongs. And weatherization also works to keep outside air, well, outdoors. That way, you’re using less energy to stay comfortable inside. 

But top-to-bottom weatherization has plenty of other benefits, too. Check out our Guide to Home Weatherization to learn more. Or to see a full list of some of the best ways to save energy, read How to conserve energy at home.

Thinking of switching from oil? Which is better, gas or electric heat?

Here’s the big question: 

If you’re thinking about converting your home heating system to run on something cleaner and less expensive than oil heat, should you go with natural gas heating or electric heat?

No matter what you end up switching to, you’ll be in a better place, because both natural gas and electric heating are going to be a less expensive way to heat your house.

However, let’s take a moment to think long-term. (Stay with us here.)

If you’re going to do a big home HVAC system improvement—including changing the type of heating fuel you use in your home—you should really consider upgrading to the most energy-efficient HVAC system possible: an electric cold-climate heat pump. 

You can learn all about heat pumps here (they’re amazing, by the way) or check out the short video later in this article, but we want to talk about natural gas heating for a moment. 

In many areas of the country, historically, natural gas pricing has been less expensive, and therefore, an affordable way to heat a home.

However, in the last couple of years, we’ve seen the price of natural gas skyrocket right alongside heating oil—all due to unpredictable global market factors.

And such is the risk of heating your home with fossil fuels. Electricity is generated by a mix of energy sources, so it tends to be more price-stable over time. 

While many homeowners buy into the myth that electric heating is really expensive and inefficient, that’s mostly due to the use of electric resistance heating—not due to modern electric heat pumps.

Electric resistant heat is fine as an emergency back-up solution, but using this heating method as a primary way to warm your home all winter is basically like heating your home with a toaster. 

It’s not efficient at all. Read electric resistance heating vs heat pumps to learn more.

But cold-climate heat pumps are the best electric home heater and the most energy-efficient way to heat a home. (With amazing efficiency ratings to prove it.)

Plus, all-season cold-climate heat pumps also function as an air conditioner in summer—they’re a two-in-one energy-efficient technology… and that’s why we like to affectionately call them the Tesla of HVAC.

Heat pumps also don’t burn fossil fuels to keep your home warm. Check out the quick video below to see how they work:

Because they don’t use fossil fuels, that means you’ll automatically get an improvement in indoor air quality and lower your risk of carbon monoxide exposure.

(There’s no carbon monoxide risk with an electric heat pump). 

We love heat pumps so much that they’re the only HVAC system we install, but we’re not the only experts who agree that heat pumps are the most comfortable and efficient way to heat and cool your home. 

Pair a heat pump HVAC system upgrade with top-to-bottom whole-house weatherization, and you’ll be the most comfortable, efficiently heated home in the neighborhood. 

Bonus: Your local utility company—and the federal government—loves when you use less energy (and love when you say goodbye to your oil tank)… so there are plenty of heat pump tax credits and financial incentives to help lessen the burden of the upgrade.

Still using expensive heating oil amidst high prices? Switch at no upfront cost

If you’re tired of worrying about high heating oil prices every year, we can help you fix that. 

At Sealed, we’re on a mission to make every home feel amazing—permanently—and cut home energy waste for good. 

You can say goodbye to expensive heating oil by switching to a heat pump at no upfront cost if your house qualifies to work with Sealed. 

And, if it’s needed, we can help you weatherize your home against drafty winters and stuffy summers, making the most of your new home heating system, curbing energy waste, and increasing your health and comfort at the same time.

Here’s how we do it:

If your house qualifies, you’ll get a free expert energy assessment of your home, and we’ll create a customized plan for your energy upgrades. (You’ll get everything you need and nothing you don’t!) 

After you approve the plan, we’ll hire and vet the best local contractors and manage the project from start to finish. (And if you don’t save energy, we take the hit.)

FAQs about home heating oil and high heating oil prices

Check out some of the most common questions about heating oil and heating oil prices.

Tab below to skip ahead!

Will home heating oil prices go down?

No one can predict exactly what will happen in the future, even with the most sophisticated data available. While you could see some relief next winter if heating oil production and oil stores increase, it’s more likely that heating oil will continue to be the most expensive way to heat a home.

The best way to skirt high heating oil prices is to switch the type of energy you use to heat your home. Say good-bye to inefficient oil heating at no upfront cost. 

What to do about heating oil rations

First things first: Don’t hoard or over-order heating oil just because it’s in short supply. 

There’s not much you can control about a fuel shortage, but you can reduce your own use at home with things like thermal curtains, a smart thermostat, and stopping drafty windows

To meaningfully cut energy waste, whole home weatherization (including insulation and air sealing upgrades) does the trick of keeping warm air in and cold air out. That way, you stay warmer without having to crank up the heat due to a cold, drafty house.

Ultimately, if you’re concerned about heating oil shortages in your area—or if you have a health issue that could be made worse in a cold house—call your supplier ahead of a heating emergency to understand your options. Or learn how to convert to an electric heat pump at no upfront cost.

What are the disadvantages of oil heating?

The primary disadvantage of heating your house with oil is that it’s generally the most expensive heating fuel. But that’s not the only problem. Burning heating oil in your home isn’t the healthiest. It can contribute to indoor air quality issues and carbon monoxide off-gassing.

Heating your home with high-efficiency electric heat pump heating is less expensive, more efficient, and healthier than home oil heating. (Plus, heat pumps keep your home cool in summer, too. So they’re like getting two HVAC upgrades in one appliance.)

If you’re looking to purchase a house that uses oil heating, consider upgrading to a cold climate heat pump before (or soon after) you move in. And if you’re looking to sell your home and use oil heat, it’s one of the best energy-efficient upgrades you can make before listing your home.

What is heating oil made of?

Home heating oil is made from petroleum. According to the U.S. Energy Information Administration, nearly all the petroleum heating oil in the U.S. is derived from crude oil (8). However, some local suppliers provide heating oil blends to withstand colder temperatures or if your tank is outdoors—but you could see more blends this winter if heating oil rationing is needed.

How toxic is heating oil?

Using home heating oil isn’t the healthiest or most efficient way to heat a home, but in general, if you’re using it correctly and your heating system is in good shape, there’s very low risk of getting sick.

Brief exposure to heating oil shouldn’t cause you harm, according to the Wisconsin Department of Health Services (WDHS), but high concentrations of heating oil exposure or breathing fumes in an enclosed space could cause health symptoms (9). 

For some sensitive people, odors from using heating oil in a home can cause issues. And according to WDHS “very long-term exposure” to fuel odors in the home can cause serious health problems—including cancer (10).  

To keep your oil heater running safely and efficiently, regular maintenance is key. Most of the conditions that cause safety or health hazards are caused by lack or maintenance, like clogged oil filters or strainers, a sooted heat exchanger, a restricted chimney or smoke stack, leaking oil fittings, or anything else that would cause improper combustion.

You should also make sure your smoke and carbon monoxide detectors are always working correctly and not expired.

Is home heating oil carcinogenic?

Possibly. According to the International Agency for Research on Cancer (IARC), some heating oils—including heavy home heating oils, like kerosene—are possibly carcinogenic to people (11). Light heating oils seem to be undetermined in their carcinogenicity in people (that is, “not classifiable as to their carcinogenicity”), according to the IARC study. But we do know that significant long-term exposure to fuel oil could cause serious health concerns (12).

The healthiest way to heat your home is with electricity; it doesn’t require you to burn any fossil fuels in your home (unlike propane, natural gas, and heating oil heaters) to stay warm. 

And the most efficient electric home heater? A cold climate heat pump. Learn how you could get one at no upfront cost if your house qualifies.

November 21, 2022