EIA 2026–27 Winter Fuels Outlook: Natural gas down 9%, heating oil up 21%, electric up 4%
As homeowners and commercial facility managers prepare for the November–March heating season, the U.S. Energy Information Administration's (EIA) *2026–27 Winter Fuels Outlook* and *Short-Term Energy Outlook* (STEO) project sharply diverging winter heating bills depending on fuel type and region (U.S. EIA Press Release; EIA Today in Energy).
Roughly half of U.S. households heat primarily with natural gas (46% of homes) or propane, and both groups are forecast to spend less this winter than last winter. Natural gas inventories entered the season 2% above the five-year average, pushing the projected Henry Hub spot price from $3.48/MMBtu in 2026 down to $3.16/MMBtu in 2027 — a 9% decline (U.S. EIA Press Release). Average household winter natural gas bills are projected at $640 (−9%) at an average retail price of $13.44 per thousand cubic feet (Mcf), while propane-heated households are projected to spend an average of $1,246 (−3%) at $2.52 per gallon (Energy News Beat / EIA; EIA Winter Fuels Outlook).
| Primary Heating Fuel | Share of U.S. Homes | 2026–27 Projected Winter Bill | YoY Expenditure Change | Forecast Retail Fuel Price & Key Driver |
|---|---|---|---|---|
| Natural Gas | ~46% | $640 | −9% | ~$13.44/Mcf; storage +2% above 5-yr avg |
| Electricity | >40% | $1,196 | +4% | ~18.23¢/kWh (+3%); PJM wholesale +41% |
| Propane | ~5% | $1,246 | −3% | ~$2.52/gal (−2%); strong domestic supply |
| Heating Oil (Distillate) | ~3% (mostly Northeast) | Highest increase | +21% | ~$5.26/gal (+34%); East Coast stocks −32% |
By contrast, households heating with electricity or fuel oil face higher bills. For the more than 40% of U.S. homes using electric heat, retail electricity prices are forecast to rise 3% to an average of 18.23 cents/kWh, lifting average winter electric bills by 4% to $1,196 (EIA Winter Fuels Outlook; Energy News Beat / EIA). Notably for New Jersey and Mid-Atlantic building owners, EIA reports that wholesale electricity prices in the PJM Interconnection rose 41% in 2026, bringing the economic balance point of dual-fuel (heat pump + natural gas furnace) systems into sharp focus (U.S. EIA Press Release). Heating oil customers — concentrated heavily in the Northeast — face a 21% jump in winter spending as retail heating oil is forecast to average $5.26/gallon (+34%) while East Coast distillate stocks sit 20% to 32% below their five-year average (EIA Today in Energy).
Life after the federal 25C credit: Utility rebates require strict commissioning
With the federal Section 25C residential energy efficiency tax credit having expired on December 31, 2025, an October 24 analysis in *ACHR News* highlights how utility-administered rebates have become the primary financial incentive for heat pump installations in 2026 — shifting administration from the homeowner's tax return directly onto the HVAC contractor's operating workflow (ACHR News).
Unlike tax credits, utility programs enforce rigorous equipment and building-science verification before paying out. For example, Sacramento Municipal Utility District (SMUD) increased its gas-to-electric heat pump rebates in 2026 to $3,000 for variable-stage systems and $2,000 for two-stage systems, plus a $2,000 electrical panel upgrade bonus — but requires a minimum 15.2 SEER2 rating, third-party HERS verification, R-8 duct insulation on any new ductwork, a connected Wi-Fi thermostat, and whole-home load coverage for ductless mini-splits (ACHR News).
R-22's "Long Goodbye": Roughly 13 million U.S. homes still rely on HCFC-22.Nearly 17 years after the 2010 cutoff on manufacturing new R-22 equipment and more than six years after the 2020 ban on producing or importing virgin R-22, an industry estimate cited by the U.S. EPA in 2026 indicates that more than 15% of the installed base of U.S. residential air conditioners and heat pumps still operates on R-22 (ACHR News). Extrapolated across EIA housing data, roughly 13 million U.S. households are still served by legacy R-22 units relying entirely on reclaimed refrigerant stock — making proactive replacement planning essential before a mid-season compressor failure forces an emergency changeout.
DOE commercial furnace rule withdrawal and 2026 heating equipment launches
On the regulatory and product front, three major developments shaped late-October trade coverage:
- DOE withdraws Commercial Warm Air Furnace "Thermal Efficiency Two" (TE2) test procedure: In a final rule published in the Federal Register and effective December 7, 2026, the U.S. Department of Energy withdrew Appendix B (the TE2 test method that incorporated jacket losses and part-load operation) for commercial warm air furnaces, leaving commercial units governed by the established Appendix A test procedure (Federal Register / DOE).
- High-capacity 96% AFUE condensing combi-boilers: Highlighted by *ACHR News* on October 27, Navien launched its fourth-generation NCB700 wall-hung condensing combi-boiler line rated at 96% AFUE, delivering up to 150,000 BTU/h space-heating input and 210,000 BTU/h domestic hot water input — supplying up to 5.4 GPM at a 70°F temperature rise and cascading with up to 15 tankless units for large residential or light-commercial loads (Navien Press Release).
- Cold-climate heat pumps hitting 100%–107% capacity at 5°F: In *ACHR News*'s *2026 Residential Heating Showcase*, manufacturers detailed variable-speed cold-climate heat pumps meeting U.S. DOE Residential Cold Climate Heat Pump Challenge benchmarks — including systems delivering 100% to 107% of rated heating capacity at 5°F (operating down to −10°F and −20°F ambient) with supply air temperatures up to 110°F and seamless dual-fuel integration alongside 96%+ AFUE condensing gas furnaces (ACHR News Heating Showcase).
Naming a product or manufacturer in this article is for identification purposes only and does not constitute an endorsement by HVAC Zone Inc. We are a multi-brand dealer and remain neutral on brand preference.
Comparing winter heating costs between natural gas, heating oil, electric heat pumps, or dual-fuel configurations for your home or commercial building? Request a consultation — we calculate site-specific economic balance points and verify local New Jersey utility rebate eligibility across all major brands.