As winter arrives and the weather begins to cool, Americans across the country will be contending with increased heating costs, compounding the economic burdens of persistent inflation and stubbornly high grocery prices. The cost of heating oil in particular is expected to rise sharply, as gas prices overall remain elevated due to the ongoing war with Iran.
A new report by the National Energy Assistance Directors Association found that heating costs will jump by 8.7 percent this winter as compared to last year—more than double the rate of inflation—with American households expected to spend an average of $1,030. Prices will increase for all fuel types, but the spike will be especially dramatic for heating oil users: The NEADA analysis projects that heating oil costs will rise by 31.3 percent this winter.
Although NEADA predicts in its report that heating oil users will spend an average of $2,297 this winter, the number might actually end up being higher. Since the report was written last week, Iran-backed Houthi rebels have captured two islands in the Red Sea, leading to a spike in global oil prices—which in turn affects the cost of heating oil thousands of miles away.
“For average families, you don’t know what the cost of gasoline is going to be next week. If you use heating oil, you don’t know what the cost of heating oil is going to be,” said Mark Wolfe, the executive director of NEADA. “If you’re just a typical family, you know, a working-class family, this is now adding considerable uncertainty to what your budget’s going to be in the next couple of months.”
The price of oil is not expected to lower anytime soon. The Energy Information Administration projects that oil production and trade flows will not return to prewar levels until spring of 2027 at the earliest, with the caveat that some Persian Gulf producers may not be able to reach their previous levels of output.
Heating prices will be especially high in New England and the Middle Atlantic, where more households rely on heating oil. This is due in part to the region’s cold winters, but also because the Northeast is a “legacy market” for heating oil, said Oriya Cohen, policy program manager in the Research to Action Lab at the Urban Institute. Many of these households will buy in bulk for heating their homes, and changing their fuel source would take more than a few months.
“There’s conversations about helping those homes get connected to the grid, or electrify, or use heat pumps and update their equipment, but again, that’s not something that’s going to happen between now and this winter,” said Cohen.
Meanwhile, because energy costs are far outpacing persistently high inflation rates, the Low Income Housing Energy Assistance Program, which would normally aid in closing the gap, could offer less bang for its buck. LIHEAP is funded by federal block grants but administered by states, which receive a certain amount based on a specific formula that takes such factors as weather patterns and energy expenditures into account. The budget for LIHEAP was $4.1 billion in fiscal year 2026, which ends in September. NEADA has called on Congress to increase LIHEAP funding to $7 billion to help counter rising costs.
“We know that it’s not meeting the demand for energy assistance that is out there, and with these rising prices this winter, we could expect that it still won’t be able to meet, or it even more so won’t be able to meet that demand,” said Cohen. “If you keep the amount of energy assistance the same, your purchasing power—that money doesn’t go as far as it did two years ago, or as it did four years ago.”
John Howat, senior policy analyst at the National Consumer Law Center, noted that households spent a significant amount on cooling their homes this past summer due to hot weather, which depleted the funds they need to keep their dwellings at a safe temperature this winter. Because the bulk of LIHEAP grants are used by states to address heating needs, Howat believes the program should be funded at higher levels to help families through all seasons.
“With prices going up now, and after this tough summer, we don’t have enough money in that program,” Howat said. “In light of the effects of climate change, we need funding to ensure that cooling assistance is available for people that lack sufficient income to make ends meet.”
LIHEAP reaches only a fraction of eligible households. Only 15 percent of eligible households received LIHEAP assistance in 2025, according to the Edison Electric Institute. It also has specific income requirements based on federal poverty guidelines, and middle-income households that are above those thresholds would not qualify for its assistance.
“Just because you’re not income eligible doesn’t mean you can afford these much higher prices. This is coming on top of food, it’s coming on top of health care, it’s coming on top of rent,” said Wolfe.
Even before the war with Iran, energy costs have been steadily rising over the past several years. The increased cost of electricity is due in part to an uptick in demand, including the energy consumption needs of new data centers providing AI services. But there are other factors contributing to higher prices, including increased natural gas costs (which in turn are affected by factors like global events and climate change), the rollback of federal clean energy subsidies and projects by the Trump administration, and outdated infrastructure in desperate need of updating.
There was also an increase in rates of energy insecurity—a household’s inability to meet daily energy needs—between 2020 and 2024, according to Energy Information Administration data. Those rates were especially high for Native American, Black, and Hispanic households, as well as very low-income households.
Energy insecurity can lead to a variety of negative health outcomes, as people forgo other necessities to ensure that their house is adequately heated or cooled, or have their energy service disconnected altogether. The impacts of policies like redlining are still being felt, with communities in formerly redlined areas more likely to experience energy disconnections. As energy prices spike, those energy insecure households living in historically disadvantaged neighborhoods will see those struggles compounded.
“Absent some very intentional, purposive actions by legislators, regulators at the state and federal levels, these historical problems are just going to get worse,” said Howat.
