Heating Oil Up 21%, Natural Gas Down 9%: Fund the Winter You Actually Burn

The energy index is up 20.4% over the past year, according to the September CPI report. Fuel oil alone is up 74.2%. It is tempting to pad every utility category in your plan and brace for the worst.

Don't, at least not evenly. This winter's heating bill depends almost entirely on what your furnace burns, and the federal forecast points in opposite directions depending on the fuel.

Four fuels, four different winters

The U.S. Energy Information Administration's Winter Fuels Outlook, released October 6, forecasts what the average household will spend on its main heating fuel from November through March:

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

Spread over five heating months, that is about $423 a month for oil, $249 for propane, $239 for electric heat and $128 for natural gas.

The change from last winter is what matters for your plan. Working backward from EIA's percentages, the average oil-heated home spends about $367 more this winter, roughly $73 a month. Electric heat adds about $46, or $9 a month. Natural gas comes in about $63 lower, and propane about $39 lower.

If you heat with gas, last winter's number is probably enough. If you heat with oil, last winter's number is built to come up short.

Why the fuels split

Heating oil is a distillate, essentially the same product as diesel, and global distillate supply is tight. EIA says reduced refining abroad has raised import costs and pulled more U.S. supply into exports, leaving U.S. distillate stocks about 11% below the five-year average heading into the fourth quarter. It forecasts heating oil at $5.26 a gallon this winter, up 34%. A milder forecast for the Northeast, where about 82% of oil-heated homes are, is the only reason spending rises 21% instead of more.

State surveys run hotter than the national average. Massachusetts heating oil averaged $6.12 a gallon on October 5, up about 73% from a year earlier, and Maine averaged $5.96.

Natural gas is the opposite story. EIA expects lower natural gas prices this winter, even though the CPI for utility gas was still 5.0% higher in September than a year earlier, so the half of U.S. households that heat with gas or propane are forecast to spend less.

Electricity sits in between: up 4.4% over the year in CPI, and EIA's full Winter Fuels Outlook expects electric-heat spending in the West to rise about 9% because it calls for a much colder winter there than last year's unusually warm one.

Source: BLS CPI, September 2026 (released October 14, 2026) and EIA Winter Fuels Outlook (October 7, 2026); state heating-oil prices via CNBC.

Treat heat as a five-month bill, not a monthly one

Most utility categories are funded at an average month, and heating is not an average month. It is near zero in September, then January and February are usually the heaviest bills of the year. If your utilities category is set at a level that worked in July, it is built to run dry in January.

The cleaner approach is to treat winter heating as its own sinking fund with a deadline:

1. Size the season, not the month. Total last November through March, then adjust by your fuel's forecast: multiply by 1.21 for oil, 1.04 for electric, 0.97 for propane, 0.91 for natural gas.
2. Subtract what is already set aside, and divide the rest by the months left before the first big bill. In YNAB, a target that builds toward a set amount by a date does this division for you.
3. Plan for the lump if you get deliveries. Oil and propane usually arrive as a fill, not a monthly bill. At $5.26 a gallon, a 200-gallon fill is about $1,052 in one payment. Know which week it will land.
4. Decide on levelized billing on purpose. Many utilities and fuel dealers offer equal monthly payments or pre-buy contracts. They smooth the cash flow, but they still bill the full season, and pre-buy prices lock in today's rate whether it falls or not. Either way, the season total above is the number to plan around.

If you heat with natural gas, the forecast hands you a small cushion. Leave the category where it was and let the difference sit as buffer until the bills actually come in.

One thing to do this week

Pull last winter's five heating bills, or your delivery receipts, and add them up. Multiply by your fuel's factor from above. That is your season number. Divide what is not yet set aside by the months until your first cold-weather bill, and fund this month's share now, before the first January statement makes the decision for you.