Residential Heating Oil Furnaces

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Understanding factors that drive the volatility in residential heating oil prices.

Fluctuations: Variations that occur in the price of petroleum distillate products due to incremental, somewhat predictable, changes in the supply and demand of such products.

More consumers begin using heating oil as a secondary heating source:

Some consumers may use heating oil to augment their existing heat source in times of extreme cold. Prices of other heating fuels (such as natural gas or kerosene) may increase even more than heating oil during these periods.

Wholesale buyers and anxious consumers drive the market up:

Resupply may be weeks away. Concerned that supplies will not cover short-term customer demand, wholesale buyers bid up prices for available product. All the while the regional inventory is being depleted. Consumers become anxious about their short-term needs and continue buying up the current inventory; driving prices up sharply until the new supply arrives.

Seasonal demand for heating oil:

Where the consumer lives also plays a significant part in the seasonal demand for heating oil. A homeowner in the Northeast might use 650-1000 gallons of heating oil during a typical winter, while their counterpart in South Carolina may use half as much

There is an appreciable amount of oil-heated homes located in New England and the Central Atlantic States. Approximately 6.3 million homes of the 8.1 million households nationwide that heat with oil are located in the northeastern part of the United States. That comprises roughly 78 percent of the total U.S. heating oil market. The seasonal increase in inventories and demand is largely confined to the Northeast. It is not uncommon for the total receipts for heating oil sales in the Northeast to exceed 80 percent of gross sales in any given year.