Heating Oil Up 21%, Natural Gas Down: How to Budget Your Winter Fuel Bill

A heating bill arrives the way cold weather does. You know it is coming, you have known for months, and it still feels like an ambush when it lands in January. I have noticed that most of the dread has little to do with the amount. It comes from not knowing the number until someone else tells you.

This year the number is less of a mystery than usual, because the US Energy Information Administration has published its estimate for the winter, and it splits sharply by fuel. Depending on what heats your home, this may be the cheapest winter in a while or the most expensive.

What the EIA expects this winter

In its Winter Fuels Outlook, published October 6, 2026, the EIA estimated average household spending from November through March, by primary heating fuel:

Natural gas: about $640, down roughly 9% from last winter.
Electricity: about $1,196, up roughly 4%.
Propane: about $1,246, down roughly 3%.
Heating oil: about $2,115, up roughly 21%.

These are national averages, and they assume a winter with temperatures close to last year's. Treat them as a starting point rather than a prediction for your address. The regional spread is wide: for natural gas, the EIA expects the average Northeast household to spend about $879 (down 14%), the Midwest about $613 (down 10%), the South about $511 (down 15%), and the West about $590 (up 7%). A cold snap can overturn any of this quickly.

One more caution comes from the EIA itself. It warns readers not to assume that switching to a cheaper-looking fuel would lower their own costs, because homes differ in size, insulation, equipment, and climate. The figures describe averages, not a shopping list.

Why heating oil jumped

Heating oil is the outlier, and the reasons are specific. The EIA points to reduced global refining activity, which has cut the supply of distillate fuel, the category that includes heating oil. That pushed international prices up, raised the cost of imports, and increased demand for American exports, leaving domestic stocks low heading into winter.

The outlook puts the average price of heating oil at about $5.26 a gallon this winter, up around 34% from last year. Households are expected to use less, about 402 gallons, roughly 9% fewer. So even a smaller burn comes with a much larger bill.

About 3% of US households heat primarily with oil, mostly in the Northeast. If that is you, it is worth giving this winter more planning than the other fuels do.

Estimate your own bill

National averages are interesting. Your own statements are useful. Here is the quickest honest way to build a personal estimate:

Find last winter's bills. Log into your utility or supplier account and total November through March. For oil or propane, add up the delivery invoices instead.
Apply this year's price change. Take the percentage change for your fuel from the list above, ideally the regional one, and multiply your total by it. Gas at $700 last winter and a 9% decline gives about $637.
Add a weather cushion. I would add about 10%. The EIA's numbers assume a normal winter, and winters have a habit of not being normal.
Adjust for changes at home. A new baby, someone working from home, a space heater in the spare room, or a new heat pump all move the number.

You will land on a range, not a figure, and that is fine. A range is enough to plan around.

Budget billing and level-pay plans

Many utilities offer budget billing, sometimes called level pay. The utility estimates your annual usage and divides it into roughly equal monthly payments, so the January spike is spread across the year. Some fuel suppliers offer a similar plan for oil and propane, with payments through the year and deliveries when needed.

It is a helpful tool, but a few things are worth knowing before you enroll:

It smooths the payments. It does not lower the total. If prices rise, your plan will usually be adjusted upward at a scheduled review.
If the estimate was off, there may be a catch-up balance at the end of the plan year. Ask when the true-up happens.
If you are on a fixed income, an even payment can make planning calmer. If your cash flow is tight in every month, it may make no difference at all.

For oil and propane, also ask whether the supplier offers a fixed-price or capped-price contract, and whether you pay by will-call or automatic delivery. Some of those windows close in the fall, so a phone call this week is better than one in January.

Help if the bill is too big

There is a quiet reluctance in many households to ask for help with a utility bill. It helps to think of these programs as infrastructure you already paid into, not charity.

LIHEAP, the federal Low Income Home Energy Assistance Program, is administered through each state. Eligibility, benefit amounts, and application windows vary by state, and funds run out, so apply early. Calling 211 or searching your state's energy assistance office is the fastest way to find the current rules.
Utility hardship funds and payment plans. Many utilities run their own funds or will arrange a payment plan before a bill goes delinquent. Call before you miss a payment, not after.
Weatherization assistance. A federal program, also run through states and local agencies, helps eligible households seal and insulate their homes at no cost, which lowers the bill for every winter after this one.
Local charities and fuel funds. For oil and propane in particular, community action agencies and local charities sometimes help with a delivery.

Rules for shutoff protection in winter also vary by state, so do not guess. If you are already behind, say so on the first call.

Cheap fixes that pay back

None of this requires a contractor. Most of it can be done on a Saturday morning with a tube of caulk and a free hour.

Seal the drafts. Weatherstripping around doors, caulk around window frames, foam gaskets behind outlets on exterior walls, and a door sweep at the bottom of the outside doors. A lit stick of incense or a candle held near the edge of a window shows you where the air is moving.
Use the thermostat as a schedule. The Department of Energy estimates that turning the thermostat back 7 to 10 degrees for eight hours a day, such as overnight or while you are at work, can save up to about 10% a year. A programmable or smart thermostat does this without anyone remembering.
Close the fireplace damper when it is not in use. An open flue is a chimney-sized hole in the wall.
Change the furnace filter, and keep vents and radiators unblocked by furniture.
Let the sun in. Open south-facing curtains during the day and close all of them at dusk. Window film or heavy curtains help on old windows.

Nothing on the list is exciting. That is a feature. The small fixes work every day of the winter without any attention.

The heating sinking-fund worksheet

A sinking fund is a plain idea: you decide in advance that a known, lumpy expense will be paid for in small, steady portions. It turns a January shock into a line in your monthly budget. Here is a worksheet you can copy into a notes app or spreadsheet.

Last winter's total (Nov to Mar) for my fuel: $____
Change for my fuel this winter: gas about -9%, electricity about +4%, propane about -3%, heating oil about +21% (national figures; use your region if you can).
Adjusted estimate: line 1 multiplied by (1 + line 2) = $____
Weather cushion (my suggestion: 10%): line 3 multiplied by 1.10 = $____
Already covered by a level-pay plan or savings: $____
Gap to fund (line 4 minus line 5): $____
Months available to fund it: ____ (for this winter, count the months from now through March; for next winter, count the months from April onward)
Monthly set-aside (line 6 divided by line 7): $____

If you are starting this winter late, put the set-aside into the same account as the bill, and let the estimate guide what you trim elsewhere for a few months. If you want a head start on next winter, here is what the EIA averages look like spread across twelve months:

Natural gas, about $640: roughly $53 a month.
Electricity, about $1,196: roughly $100 a month (this is the total electric bill for electrically heated homes in those months, not the heating alone).
Propane, about $1,246: roughly $104 a month.
Heating oil, about $2,115: roughly $176 a month.

Your own numbers will differ. The practice is what matters: open a separate savings account, name it "Winter," and set up an automatic transfer. A fund with a name is much harder to raid than a vague intention.

FAQ

Is it cheaper to heat with natural gas or electricity?

The EIA's average figures favor natural gas this winter, but the comparison is not clean. The homes using each fuel differ in size, climate, and equipment, and a modern heat pump can change the math. Use your own bills and local rates rather than national averages.

Does budget billing save money?

No. It spreads the same annual cost into steadier payments. The benefit is predictability, and the risk is a catch-up balance if the estimate was low.

When should I apply for energy assistance?

As early as you can. Programs like LIHEAP vary by state, and funding can run out before the season ends. Call 211 or your state's energy assistance office to find the current application window.

What is the fastest way to cut a heating bill without spending much?

Seal drafts and set the thermostat on a schedule. Those two steps cost little, take about an afternoon, and work all winter.