Budgeting with Heating Oil

Summer is here! But with the warm and sunny weather, I bet heating oil is the last thing on your mind. However, just because we’re out of the heating oil season doesn’t mean that you shouldn’t start preparing for next season! With that comes a budgeting plan!

Prices for heating oil have been fluctuating a lot. During the winter, prices can get as low as $3.30 a gallon in CT and $3.40 a gallon in NY. Even if prices have been going down, it’s not a bad idea to start budgeting.

While this is a bit larger in scale, it still shows that while heating oil is starting to go down in price, it spiked in price in early 2022 due to Russia’s invasion of Ukraine. But, it has been on a steady decline since.

How Much Oil Will You Use Annually?

I’ve touched on this topic in particular on several occasions. The short and sweet of it is, it depends on your daily usage. The bigger and older your house is will usually determine how much oil you should be using. If your home isn’t well insulated, then you will naturally burn more oil. Additionally, if your boiler is heating oil-based, expect to use an extra 100 gallons per year.

Will all of that in mind, most average homes will use about 900 gallons of heating oil per year. If you are interested in finding out how much oil you are burning daily, weekly, monthly, or yearly, I recommend getting a Smart Oil Gauge to track your usage. The alternative to that is collecting your delivery tickets and calculating an average based on those

In the above chart, you’ll see what the average home in CT will burn based on their home’s square footage.

How Much Should You Budget on Heating Oil?

Over the past couple of years, heating oil prices have seen a lot of fluctuation. Between COVID-19 bringing it down to incredibly low prices and Russia invading Ukraine in 2022, oil prices have not been consistent. But with that being said, heating oil prices per gallon rarely get above $4. For $2.50 per gallon, the average home will be able to spend $2,250 a year. With a price like this, it’s wise to save around $450 a month for heating oil.

As we leave the cold early months behind, we must prepare for 2024’s heating season. If the prices for heating oil continue to go down, then putting money aside for heating oil is a smart decision! This will give you the ability to save the remainder of that money on anything else that you might need such as groceries and gasoline. If the prices continue to go down, then the total annual cost of heating will decrease! However, if the prices decide to go back up, then this can be problematic as it will effectively cost more to heat with heating oil.

During the winter months, instead of budgeting around $450, expect to budget $950 a month due to increased usage.

Another example of how much heating oil prices have changed over the past year.

Start Saving Now to be Prepared for Winter

One of the best ways to be on top of heating oil budgeting is to start saving now! Heating oil prices have been fluctuating for some time and saving now will help you in the long run. Some heating oil companies might offer a “Budget Plan” to help you save. But in reality, you can do this yourself by putting a little bit of money aside each pay day to put into an “oil fund”.

You can start by estimating how much you spend a year based on your previous deliveries. You can do this by checking previous bank statements or delivery slips. Add them all up and divide that number by 10-12 and you’ll come up with a total amount that you need to save every month.

It’s never too late to start saving money and budgeting. While we won’t know what the price of heating oil is come winter, it’s better to be prepared when the time comes so that you’ll have some money set aside. If you start saving now and prices continue to go down, then you’ll be way ahead of the game once the cold weather hits.

Happy Heating,