Northeast careening into ‘Whac-A-Mole’ winter energy crisis
Breanne Deppisch
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After enduring months of record-high gas prices and pain at the pump, people and their wallets are ready for a break. But nowhere is relief further from sight than in New England, where energy prices are fast-rising, emergency inventories are depleted, and the region’s overreliance on distillate fuel has sent it careening toward a winter crisis.
According to the Energy Information Administration, residents who rely on home heating oil will spend an average of $2,354 to heat their homes this winter — a 27% increase from the previous winter and the highest price point in more than 25 years. The Northeast relies heavily on heating oil, which serves as the primary source of heating for 18% of households.
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Those who use natural gas for heating will also spend an eye-popping average of $1,094 — 28% more than last winter.
Add to that the fast-dwindling stocks of U.S. distillate fuel and the Northeast appears to be snowballing quickly toward a major energy crisis, with little, if any, short-term relief in sight.
The U.S. ban on Russian gas imports was a major contributing factor: Prior to the war in Ukraine, the United States was importing roughly 700,000 barrels of petroleum from Russia each day, according to government data. Of those imports, most were shipped directly as refined petroleum products, allowing the Northeast to use its own few refineries to produce gasoline instead.
Making a switch from gasoline to distillate fuel production would be difficult since U.S. refineries can’t just “turn on a dime to stop producing gasoline and start producing distillate fuel,” said Mark Wolfe, the executive director of the National Energy Assistance Directors Association.
In addition, New England has been dubbed an “energy island” due to its dearth of pipelines, which leaves it largely disconnected from the rest of North America and limits its ability to import alternative supplies as a near-term fix. In 2021, more than one-fifth of the East Coast’s distillate supply was imported from international sellers.
Europe has also agreed to send some diesel imports as a temporary reprieve, though the impact will be limited.
Signs of crisis are multiplying in New England — and quickly. “It’s like a giant game of Whac-A-Mole, heading into winter,” Wolfe said. “Supplies are low. Europe has increased purchases from abroad to replace Russian distillate sales — that’s causing tightness in the market,” he said.
And with fuel storage dropping to its lowest point since 1951, containing just enough emergency supplies to last for 26 days, analysts say this is likely just the start of a lengthy and painful winter.
In the meantime, consumers and retailers are doing what they can to get by.
Some wholesalers have begun allocating limited amounts of heating fuel to retailers in their home states, who in turn must ration the amount they can sell to consumers.
And buyers are making do with less.
Some are filling their tanks to just partial capacity this winter, while others have opted to stop dining out or buy fewer groceries, one of many painful trade-offs needed to support the staggering costs.
For Abdulmuqsad Waziri, an Afghan evacuee who assisted U.S. troops during the war, finding ways to foot high energy bills in his new home state of Massachusetts has been an especially difficult challenge. His family was resettled in the state late last year, and he’s since found steady work at a restaurant that he enjoys.
But despite his hard work, diligent budgeting, and eager requests for as many extra shifts as the restaurant will allow him to take on, the price of his first winter heating bill, in October, took him by surprise.
“The last bill I received was $500,” he said. “I was not in a position to pay that bill.” Thanks to an international aid group, he got the help he needed.
But concerns loom large for the months ahead — not just for Waziri, but for the thousands of others who say they are shelling out hundreds more per month to heat their homes than they were in previous years — threatening a very real affordability crisis for many.
And since analysts don’t expect distillate markets to return to normal until next summer at the earliest, the U.S. is in uncharted territory, at least for the foreseeable future.
“This is the first time, really, that one fuel has jumped so high before” and has so directly upended the lives of consumers, Wolfe said.
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“We’re worried about families that could pay the bill last year, the year before, but won’t be able to pay it this year. And we’ll have more people coming in and asking for help,” he said.
“Between supply problems, price problems, it’s quite serious.”