5 Ways to Lower Home Energy Costs

Oil and natural gas prices are declining, but it's still expensive to warm your home

a programmable thermostat with an arrow pointing down on a green background

Photo Illustration: AARP; (Source: Dan Saelinger/Trunk Archive)

Donna Fuscaldo,

AARP

En español

Published March 21, 2022

/ Updated January 22, 2024

Home energy prices are falling year over year, but with a cold snap plunging much of the country into bitter cold, it may not feel like much relief. As of December’s consumer price index, home heating prices are down 14.7 percent from a year earlier while natural gas prices are 13.8 percent lower. Still, with inflation elevated, consumers are looking for ways to save.

That's even with spring around the corner and, eventually, warmer weather. Consumers will be shelling out money for home energy for several more weeks, particularly for residents of the Northeast, which has the vast majority of heating oil customers. For budget-conscious homeowners, the good news is that there are ways to save, including the following.

Reduce your consumption

A surefire way to lower your home energy bill is to reduce your consumption. According to Energy Star, you’ll save 10 percent on your energy consumption for every 10 degrees you lower the temperature in your home. If you have a programmable thermostat, you can set it to do that automatically when you’re at work or asleep.

If you’re traveling, consider turning your water heater down to a vacation setting. You don’t need a 40-gallon tank of water heated to 120 degrees or more if you won’t be taking a hot shower for a few days. Remember to turn it back on when you return from your trip.

Shutting doors in unused rooms can also help you conserve heat. Heat will remain in the room longer, which means your system won’t have to pump out more hot air. If you have an oil-fired heating system, Energy Star recommends getting it cleaned and tuned annually, while a gas-fired one can be cleaned every three years. Regular maintenance will increase its life span and reduce heating costs.

Weatherize your home

Leaks and gaps around your windows and doors cost you money in energy. Fixing them won’t break the bank. That’s why Lauren Urbanek, senior energy policy advocate at the Natural Resources Defense Council (NRDC), says to weatherize your home by sealing window cracks and gaps with caulk and reduce drafts by installing more or new insulation. That’s particularly true if you live in a house that was built over a decade ago, when energy efficiency wasn’t top of mind for builders. Uninsulated or under-insulated walls and attics can lose a large amount of heat. According to Energy Star, roughly 30 percent of a home’s heating energy literally goes out the windows. “About 80 percent of the housing units in the U.S. were built in 1999 and before. In that case, energy efficiency upgrades are going to be worthwhile,” Urbanek says.

If you are in the market to replace your oil or gas boiler, Urbanek says, consider an electric model such as a heat pump. The technology has improved in recent years, with both heating and cooling built into one system. “It’s much more efficient than the gas counterpart, which saves energy over time and it’s cleaner to run,” Urbanek says.

Older adults on a fixed income who are having trouble paying their utility bills, replacing a furnace or making energy improvements to their home can get financial help through the government’s Low Income Home Energy Assistance Program (LIHEAP). The program is funded on the federal level but administered by the states. To find out how to apply in your state, use this link.

Forgo automatic deliveries of oil

When it comes to heating oil, people do not want to be left with an empty tank, particularly during winter. As a result, many U.S. homeowners will sign up for automatic deliveries with their oil company. The contracts typically last a year and ensure you receive oil before you run out. But they can also cost you way more when prices are soaring. “Folks who buy on a will-call basis, in which you basically buy oil as needed, historically pay 50 cents less than automatic delivery,” says Steve Williams, founder and president of FuelSnap.

Why? Oil companies know that when prices soar, not all customers are going to pay their bills, so they pass on those increased costs to their automatic customers, Williams says. “Companies don’t want to do it, but when costs get this high and customers can’t pay, they have a little extra buffer,” he says.

This differs from locking in a rate for the year with your oil company. If you did so last June, when oil prices were lower, you look smart. If you locked in more recently, you could end up paying a higher price for the entirety of the contract.

Shop around for your energy

Just like you can get deals on goods and services when you shop around, the same goes for oil. Thanks to the internet and mobile apps, you can monitor the price of oil and place an order when the cost comes down. That requires you to stay on top of oil prices and your oil tank, but it can go a long way in saving you money. A rule of thumb: Don’t wait past a quarter of a tank to place your oil order, Williams says. That gives you enough time if there are any delays in getting a delivery out to your home.

Use a smart thermostat

Programmable thermostats let you automatically set your temperatures based on when you are in the home and active. A smart thermostat takes it to the next level by connecting to the internet. That means you can control your heating online or from a mobile app. Some smart thermostats even have built-in artificial intelligence that learns your behaviors and can create more efficient heating schedules for you. Energy Star has a list of smart thermostats that are approved by the government agency on its website.

Editor's note: This article was originally published on March 21, 2022. It has been updated to reflect new information.

Donna Fuscaldo is a contributing writer and editor focusing on personal finance and health. She has spent over two decades writing and covering news for several national publications including The Wall Street Journal, Forbes, Investopedia and HerMoney.