Governors' Biofuels Coalition

Even though the price of oil fell with the prospect of a Democratic Congress and of a negotiated end to the Iran conflict, you should expect to pay more to heat your house this winter. The typical heating oil tank now costs $1,640 to fill — up from roughly $900 last year.

If you plan to fly over Christmas, expect higher fares than in 2025; rising jet fuel costs have already cost domestic airlines $6 billion this year, a nearly 84 percent increase. If you drive a truck that uses diesel, you, too, can expect to pay more; truckers on the New Jersey Turnpike are filling up with diesel at prices that are about 70 percent higher than they were a year ago.

Heating oil, diesel and jet fuel share a common molecule, which means that homeowners, truckers and airline passengers are competing for the same fuel, chasing prices higher.

This winter, the United States will have to bend environmental rules, empty the storage tanks, maximize alternative fuel sources and open the federal checkbook to supply enough fuel to the economy. American refineries are essentially running flat out — operating at 94 percent of capacity. The key to increasing supply rests in squeezing more out of biodiesel and renewable diesel refineries. The federal government also needs to extend the current waivers on the amount of sulfur that is allowed in diesel. For now, dirty heat is better than unaffordable heat.

Don’t expect much price relief. There’s plenty of oil, but because of damage done to refineries in the Middle East and Russia, fuel inventories are near multiyear lows. That means wholesale diesel “cracks” (the difference between the prices for refined diesel and crude oil) reached record highs in September — the refiners are extracting fatter profits.

So if you live in, say, Camden, Maine, where retail prices for heating oil have reached about $6 a gallon, you are going to be spending $2,370 this winter to heat a 1,500-square-foot house, versus $1,310 last year. Go farther south, in Chattanooga, Tenn., and heating that same home will cost $746, compared with $429 last winter.

There’s no escaping high prices on either side of the Atlantic. In Scotland, France and Germany, the story is much the same.

Trying to appear sensitive to affordability issues before the midterms, both Democrats and Republicans were calling for releases from the Northeast Home Heating Oil Reserve (NHHOR), the one-million-barrel supply held in reserve for just such occasions (the Trump administration announced that it will release up to one-third of the reserve). Congress can also expand the Low-Income Home Energy Assistance Program funding. That will help financially.

But there isn’t much else the current Congress can do to increase supply. This winter will be more about efficiently moving barrels, not in filling more of them.

Let’s assume that stable geopolitical friction results in a Brent (European) oil price near $112 per barrel. Heating oil prices in Maine would remain close to today’s $5.97 a gallon, while New Jersey road diesel would sit near $6.40 a gallon and European prices would be about 1 percent lower than today.

But any significant escalations in the war — say, the United States attacking Iran again — could send the crude price and the diesel crack spread near $125 a barrel. Maine heating oil would reach $7.27 a gallon (up about 20 percent from where it is now), while heating bills in Europe could rise 18 percent. Neither side of the Atlantic has made the investments that would keep supply chains robust and flexible, and so they remain exposed to geopolitical volatility.

The Trump administration’s “drill, baby, drill” agenda, paired with its reversal of support for renewables, has produced more lease offerings than consumer relief. Even with high prices, oil producers largely skipped auctions for leases that would allow them to drill in Alaska. And the administration’s scheduled 2027 auctions of leases off California will have to survive the state’s opposition.

When the Democrats take control of Congress in January, they will need to generate power from all available sources — hydrocarbon, renewable, nuclear — to make our economy function and to lower energy costs for voters.

They particularly need to focus on making the next shortage less severe by completing the work on reforming the permitting process for energy projects while preserving effective scrutiny. Congress could also provide incentives to reduce households’ exposure to home heating oil shortages, especially in the Northeast. That will require improvements in the region’s power transmission lines and natural gas pipelines. And that too, makes permitting reform imperative.

We’ll also need to restock the Strategic Petroleum Reserve (SPR) , at no small cost. This would be a good opportunity to review the mix of what should be stocked, where those stocks are held, and possibly specify the conditions that trigger petroleum or heating oil releases from the SPR or NHHOR.

And lastly, don’t forget El Niño. That weather phenomenon introduces a wild card that could either ease or intensify heating demand. Previous strong El Niño winters brought milder temperatures across the northern tier of the United States. Yet these winters also suggest an elevated risk of a late-season shift toward sharp cold snaps. El Niño may buy a few percentage points of demand relief, but it does not buy refining capacity or refill inventories.

Whatever the winter brings, the Atlantic Basin enters it short of fuel — and short of options.