In the most densely populated corner of the US, temperatures are just starting to drop. And the signs of a winter crisis are already multiplying.
Heating oil delivered to New York is the priciest ever. Retailers in Connecticut are rationing it to prevent panic buying. New England’s stockpiles of diesel and heating oil — the same product, taxed differently — are a third of normal levels. Natural gas inventories are also below average. A Massachusetts-based utility is imploring President Joe Biden to prepare emergency measures to prevent a gas shortage.
Add some cold to the mix, and in the best-case scenario, Northeast consumers will shoulder the highest energy bills in decades this winter. The Biden administration, under pressure to tame prices ahead of the midterm elections, is considering ways to stash more diesel and gasoline in New England. In the worst-case scenario, a cluster of states with a combined economy bigger than Japan’s will run out of fuel to keep the lights on and heat homes and businesses.
“It’s going to be pretty bad,” said Marcus McGregor, head of commodities research at Conning Inc. “Diesel, heating oil and natural gas prices are through the roof. When you’re on a fixed salary, how does it impact your overall budget? It has to be bad.”
The Northeast is no stranger to fuel constraints. Its dearth of pipelines and refineries means the shale fields of Texas and Pennsylvania might as well be on the other side of the world. But now, a global supply crunch intensified by the war in Ukraine is putting the region at risk of an energy disaster to rival the one menacing Europe. The Northeast will compete with countries across the Atlantic and around the world for fuel to generate power, fill up trucks and keep the cold at bay.
Rocky MacDonald, a father of three and realtor in Stoneham, Massachusetts, expects to pay over $500 for heating oil to keep his three-bedroom ranch house warm this winter. That’s about 20% more than last year. To save money, MacDonald and his wife are cooking dinner at home more often. When they do go out, they skip the bottle of wine.
“I just can’t believe it. The monthly expenses are crazy amounts,” said MacDonald. “I’m trying to hoard every penny.” His family’s total spending has climbed to $10,000 a month from $8,000 last year, and he’s worried that rising interest rates will trigger a housing-market slump, eating away at his income.
For Rocky and other consumers grappling with historic inflation, the outlook is increasingly dire. Americans are poised to spend the most on heating in at least 25 years this winter, government estimates show.
In the Northeast, a typical family is expected to pay $1,094 to keep warm with natural gas this winter, 23% more than last year, the Energy Information Administration said. Homes that rely on oil for heat — primarily in New England and the Mid-Atlantic — will be hit even harder, with an average bill of $2,354. Low-income consumers will suffer the most.
“Some of the most at-risk people of suffering when heating fuel runs out are immigrants and refugees,” said Jeffrey Thielman, president of the nonprofit International Institute of New England. “We are very concerned about the coming winter.”
That creates a tricky political calculus for the Biden administration. US energy exports have surged amid pressure to help European allies replace sanction-hit Russian supplies. But Biden is also facing calls to curb such shipments to help consumers at home. For Republicans, inflation has proved to be a potent political weapon: A press release announcing a Donald Trump rally in Pennsylvania this month noted the state’s surging heating oil prices.
So far, the Biden administration is using one of the few tools it has at its disposal to tackle high pump prices: It’s releasing unprecedented amounts of crude oil from the nation’s emergency reserves. But that can only go so far. US refineries are already running flat out, and without excess capacity to process the crude into usable fuel, the extra oil releases don't do much good.