Natural gas users may save while heating oil households face higher bills
The U.S. Energy Information Administration (EIA) expects a mixed energy cost picture for the upcoming winter season, with some households likely to spend less on heating while others may face higher bills.
According to the agency's latest Winter Fuels Outlook and October Short-Term Energy Outlook, households that rely on natural gas or propane for heating are expected to see lower energy expenses compared to last winter. These households account for roughly half of all U.S. homes.
“Relatively high natural gas inventories entering the winter season provide a cushion for heating demand, while households that rely on heating oil face higher prices because distillate markets remain tight,” said EIA Administrator Tristan Abbey.
However, consumers who use electricity or heating oil for space heating could face increased costs during the winter months. Heating oil users are expected to see the largest increase in expenses. The EIA estimates that heating oil costs could rise about 21 per cent compared to last year, largely because fuel prices remain elevated.
The agency noted that heating oil markets continue to face supply challenges. Distillate fuel inventories, particularly along the U.S. East Coast, remain well below normal seasonal levels. Although slightly milder weather in some areas may reduce heating demand, higher fuel prices are expected to increase household expenditures.
Natural gas consumers may benefit from strong domestic production and healthy inventory levels. Storage levels entering the winter season are expected to be above the five-year average, helping to limit major price increases. The EIA forecasts the Henry Hub natural gas price will decline to approximately $3.16 per million British thermal units by 2027.
Weather remains an important factor in the forecast. National winter temperatures are expected to be similar to last winter and close to the long-term seasonal average. However, meteorologists continue to monitor a strong El Niño pattern that could create different regional weather conditions and affect energy demand.
Global energy markets also continue to influence fuel prices. The EIA expects oil production and exports from the Middle East to increase gradually as transportation routes improve and supply disruptions ease. The agency projects that crude oil production outages will decline between late 2026 and early 2027.
Despite expectations for increased supply, oil markets remain tight. Brent crude oil averaged $114 per barrel in September and is expected to average $105 per barrel during the final quarter of 2026. As global supplies recover and inventories rebuild, prices are forecast to moderate, averaging about $84 per barrel in 2027.
Fuel costs at the consumer level have also increased. Retail gasoline prices averaged $4.35 per gallon in September, while diesel prices averaged $6.29 per gallon. Diesel prices are expected to remain above $6 in the near term before gradually easing over the next year.
The outlook also highlights continued growth in U.S. energy production. Domestic crude oil production is projected to rise from 13.7 million barrels per day in 2025 to 14.3 million barrels per day in 2027. Liquefied natural gas exports are also expected to increase, reaching 19 billion cubic feet per day by 2027.
Electricity generation remains heavily dependent on natural gas, which is expected to provide about 40 per cent of U.S. power generation through 2026. Renewable energy sources continue to expand their share, with solar generation rising from 7 per cent in 2025 to 9 per cent in 2027 and wind power increasing to 12 per cent.
The EIA also forecasts continued economic growth, with U.S. gross domestic product expected to increase by 2.6 per cent in 2027. Carbon dioxide emissions are projected to remain relatively stable while renewable energy adoption gradually grows.
Overall, the latest forecast suggests that ample natural gas supplies will help moderate heating costs for many households this winter, while higher heating oil prices and global market pressures continue to create challenges for some consumers.
Photo Credit: Energy Information Administration