Households that use oil are facing a particularly costly winter. The federal government needs to unlock rebate funding to help families install heat pumps and insulation, and utility programs supporting these cost-saving upgrades should be expanded.
The Iran war continues, oil prices are surging again, and the winter heating season is approaching fast. The Energy Information Administration estimated this week that households with oil heating will see a 21% increase in their bill this winter, or more than $360 over last winter. Another reputable forecast last week estimated a 50% increase.
The costs will hit hardest in the Mid-Atlantic and Northeast, where the nearly five million U.S. households using oil-fired furnaces or boilers are concentrated, disproportionately in rural areas.
“Oil prices are absolutely outrageous, and we’re concerned that we’re not going to even make it through the winter,” Krista Hinkley, a mother of three, recently told Maine Public.
The federal government and Congress, along with utilities and their regulators, can take several actions to help these families—many already struggling to pay energy bills—upgrade their homes and heating systems to dramatically reduce their bills.
Heat pumps and weatherization can lower costs
Heating with oil was already expensive. In a study last year, we estimated that an average Maine home with oil heating pays about $4,200 per winter.
Today’s cold-climate heat pumps can heat a home even in Maine’s cold, while lowering bills. A household there switching from oil heating would save about $1,000 each winter, we found (before the current price surge, so savings are likely larger now). RMI recently estimated that, in Maryland, households that use oil or propane for heating would save about $1,200–$1,600 each year by switching to heat pumps.
Improving insulation and air sealing also helps keep heating bills down. That’s a big opportunity considering nearly 90% of single-family, detached American homes are under-insulated.
Federal programs have helped but need to be unlocked, restored, and protected
A nearly $9 billion federal rebate program could help many families who use oil. Congress created the rebates, which are geared toward low- and moderate-income households, to support a range of energy upgrades. They can cover up to $8,000 toward a heat pump installation for income-eligible households. The Department of Energy (DOE) most recently said these rebates can fund a heat pump in homes with any fuel type.
Most of the funding for rebates is stalled, though. The DOE required states—which administer the rebates—to resubmit their program plans by late August for approval. The DOE does not publish a list of program approval statuses, but we know that only West Virginia has launched a program since then. The department should end these holdups and release the funds.
Tax incentives have also helped families install heat pumps. But last year Congress ended the most recent version, which provided up to $2,000 for installations. Lawmakers should create new, updated tax credits, including making them refundable so more families can use them.
Federal weatherization funding helps low-income families, including those with oil heating, lower their bills. The Weatherization Assistance Program and the Low Income Home Energy Assistance Program fund air sealing, insulation, and other upgrades for income-eligible households. Weatherization saves participants an average of $372 annually on energy bills.
President Trump has repeatedly proposed eliminating this funding, but bipartisan majorities in Congress have maintained it. Many more households are eligible for weatherization than the program serves, so Congress should expand it.
Utility efficiency programs are helping, but need to be expanded
In several states, utility efficiency programs have made meaningful progress in recent years helping families with oil heating switch to heat pumps, and those efforts can be expanded. Leading programs provide incentives that cover several thousand dollars of the upgrade cost (in larger shares for low-income households).
In Vermont, for example, more than 10% of homes now have heat pumps. Many of these previously relied on oil heat. Virginia, which has about 140,000 homes with oil heating, is taking early steps, with a new law this year setting targets for utilities to provide no-cost efficiency upgrades (including heat pumps) to low-income residents who use oil or propane.
Some states are further behind. In Pennsylvania, families can get a few hundred dollars toward an efficient heat pump, but not the larger incentives needed to help most oil-heated homes switch.
Winter heating season doesn’t have to be this painful
This will not be the first time families face cost spikes in oil or other fuels. And until these homes are heated with efficient heat pumps, it will not be the last. Policymakers can help families make the switch: DOE can release stalled rebate funds and Congress can pass new refundable tax credits and expand weatherization funds.
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