Iran War Drives Heating Oil Prices Sky-High

The ongoing war in Iran is having far-reaching consequences for Americans, particularly those living in the Northeast who rely on heating oil to keep their homes warm during winter. According to data from the Federal Reserve Bank of St. Louis, the average price of a gallon of heating oil has skyrocketed from $3.58 in January to over $5 per gallon by March.

The National Energy Assistance Directors Association predicts that households relying on heating oil will spend a staggering $2,279 to keep their homes warm through the 2026-27 winter, a 31% increase from last year. In states like New York, prices have risen even higher, with an average price of $6.27 per gallon, a 70% increase compared to last year.

Heating oil is nearly identical to diesel fuel, and its price moves in tandem with the global diesel market. The main driver behind the spiking prices is the record-high international benchmark Brent crude oil price of over $106 per barrel. Additionally, disruptions in the Middle East, including attacks on major oil refineries, have reduced global capacity to convert crude oil into fuels like gasoline, diesel, and heating oil.

For low-income residents, particularly those on fixed incomes, this means a difficult financial situation as they struggle to afford enough fuel to make it through the winter. The federal Low Income Home Energy Assistance Program (LIHEAP) provides funding for home energy assistance, but with $100 million less to distribute this year due to expired supplemental funds, households may not receive sufficient support.