Retail diesel should average about $4.50 a gallon next year, the U.S. Energy Information Administration says in its October forecast released on October 6. That is a long way below the $6.29 a gallon the agency says diesel averaged in September, but it is still well above the roughly $3.68 a gallon AAA reported for diesel a year ago. The forecast depends on crude oil falling back from this autumn’s highs, with Brent crude at $84 a barrel in 2027. For trucking companies, farms and Northeast homes that burn heating oil, a cheaper 2027 would still be an expensive one.
The October diesel forecast
EIA’s Short-Term Energy Outlook, which the agency updates every month, puts the 2027 diesel average at about $4.50 a gallon in its text and $4.49 in its price table. The forecast was completed on October 1. Compared with the September outlook, the agency raised its 2027 figure from $4.40, an increase of 2.0%, and lifted its 2026 average to $5.19 from $5.07, up 2.4%. The revision runs the wrong way for anyone hoping for faster relief, though the 2027 number is still a decline from this year.
The question for households and small businesses is whether diesel and delivery costs ease next year, and EIA’s answer is only partly. The agency now expects retail diesel prices to average about $4.50 a gallon next year, after prices that it says will stay above $6 a gallon in October. Freight carriers that price hauls by the mile and families that heat with oil are the ones facing a budget decision, because diesel and heating oil are closely related fuels that EIA classes together as distillates.
Diesel reaches household budgets through delivered goods and through heating oil, and the programs that help with heating bills are separate benefits that each have to be applied for. The Benefits Checklist is a paid guide that covers 11 benefit programs, including heating and cooling help, with the 2026 income limits for them.
See the 2026 income limits for 11 benefit programs behind winter heating bills →
Prices at the pump have already begun to slip from their peak. AAA’s daily average for diesel was $6.3151 a gallon on October 6, below the record of $6.5276 set on September 22, and the motor club headlined the move as a dip after a record-setting September. EIA’s weekly survey, which it published on October 6, put the national on-highway average at $6.199 on October 5, down 18.3 cents from the week before.
Why diesel is tighter than crude oil alone suggests
A large part of the squeeze sits in refining rather than in crude. EIA says crack spreads, the gap between the price of crude oil and the price of the fuels refined from it, increased throughout September, with distillate spreads particularly elevated. The agency expects them to decrease but says they will remain high relative to historical averages. That is why diesel can stay expensive in 2027 even as the forecast for Brent falls.
The crude side of the story is the Middle East. EIA says attacks on the East-West pipeline in Saudi Arabia pushed Brent to $131 a barrel on September 15, and it assumes oil flows from the Middle East stay constrained through the fourth quarter of 2026. Its forecast has Brent averaging $105 a barrel in that quarter and $84 in 2027. In the agency’s words, extreme tightness in diesel markets raises demand for crude, because refiners have to run more oil to meet diesel demand.
Stockpiles are thin where they matter most for winter. EIA reports that East Coast distillate inventories fell 32% below their five-year seasonal average in September and are forecast to stay between 20% and 30% below that average in 2027. Global oil inventories fell by an average of 1.9 million barrels a day in the third quarter of 2026. Low stocks leave less cushion if a pipeline, a port or a refinery goes offline, which is why a forecast of falling prices still carries a wide margin of doubt.
Diesel is also a product refiners cannot easily make more of. EIA says U.S. refineries produce an average of 11 to 12 gallons of diesel from each 42-gallon barrel of crude oil. In its breakdown of what drivers pay, crude oil made up 42% of the diesel price, refining 25%, distribution and marketing 23% and taxes 11% in May 2026. Refining and distribution together outweigh crude, so a high margin at the refinery shows up directly at the truck stop.
Freight, farms and heating oil
Diesel is the fuel behind most of what moves. EIA lists freight and delivery trucks, trains, buses, boats, and farm, construction and military vehicles among its users, along with generators that serve as backup power in hospitals and utilities. A truck driver pays the same national average as everyone else only on paper. EIA’s October 5 survey shows $5.819 on the Gulf Coast, $6.286 in the Midwest, $7.229 on the West Coast and $8.082 in California.
Heating oil is the household version of the same problem. EIA says households that use it face heating oil prices more than 30% above last winter, with their spending expected to rise 21%. The National Energy Assistance Directors Association puts the increase for heating oil customers at 31.3%, well ahead of 9.0% for electricity, 8.7% for propane and 5.8% for natural gas. Executive Director Mark Wolfe called it a warning that too many families are entering winter with no room left in budgets.
The same group says the average household’s winter heating bill across all fuels is $1,030, an increase of $82, or 8.7%. Heating oil is dyed red under IRS rules, and EIA says most of it is sold in New England and the Central Atlantic states. The Northeast therefore absorbs the full force of the distillate shortage, from the East Coast stockpile gap to the jump in heating oil prices.
Heating oil bills and the federal energy aid program
The federal route for heating help is the Low Income Home Energy Assistance Program, known as LIHEAP, which the Department of Health and Human Services runs through its Administration for Children and Families. The agency says it helps with home energy bills, energy crises, weatherization and minor energy-related home repairs. Applications go through state and territorial grantees, and the national referral line is 1-866-674-6327, open weekdays from 9 a.m. to 7 p.m. Eastern, with a lookup at Energyhelp.us. There is no fee to apply.
Money for the program is the other open question. NEADA says LIHEAP is funded at $4 billion now and that it has requested $7 billion. The group also counts 13.4 million electric service disconnections and 1.7 million natural gas disconnections in 2024, figures it cites in warning that this winter’s bills will land on households already behind.
The 2027 diesel forecast rests on one assumption in EIA’s outlook: that Middle East oil flows, constrained through the end of this year, recover enough to pull Brent from $105 to $84. If they do not, the $4.49 in EIA’s table is the number most likely to be revised, as it was upward this month.
For households working through heating oil bills this winter, the Benefits Checklist is a 69-page paid guide with 11 benefit programs and a 50-state phone directory for the agencies behind them. It also comes with a printable tracker.
Get The Benefits Checklist for winter diesel and heating oil costs →
This article was produced with AI assistance and reviewed by The Money Overview’s editorial team.
