What are the main components of the price of heating oil?
The main cost components of the retail heating oil price for residential consumers are the
- Cost of crude oil for refiners
- Cost for refiners to produce heating oil
- Costs to market, distribute, and deliver heating oil to consumers
- Profits (and sometimes losses) of refiners, wholesalers, and local distributors
From the winter of 2005–06 through the winter of 2015–16, crude oil accounted for 56% of the average price of a gallon of heating oil during the winter months (October through March). The next largest component, distribution and marketing costs and profits, accounted for approximately 28% of the cost of a gallon of heating oil. Refinery processing costs and profits accounted for another 16%.
What is the outlook for heating oil prices?
The U.S. Energy Information Administration (EIA) publishes projections for residential heating fuel prices and average household heating fuel consumption and expenditures for the winter in the October through March editions of the Short-Term Energy Outlook (STEO).
The projections for each winter are featured in the Winter Fuels Outlook section of the October edition of the STEO and in Table WF01 Average Consumer Prices and Expenditures for Heating Fuels in the October through March editions of the STEO. The projections are on a national and regional level.
How can consumers reduce their heating oil bills?
Heating oil consumers can arrange to have their heating oil tanks filled in late summer or in early fall when prices are generally lower. Heating oil dealers may offer their customers a budget plan to help even out monthly heating oil bills. Some dealers may also offer fixed-price protection programs that may help keep costs down.
Efficiency and conservation measures
Consumers can reduce heating oil consumption by caulking and weather stripping windows and doors to seal out cold air, by installing proper insulation in the attic and walls, and by reducing temperature settings on thermostats.
Both federal and state energy assistance programs are available to heating oil consumers who have a limited budget. For example, the Low Income Home Energy Assistance Program (LIHEAP) is a federal program that distributes funds to states to help low-income households pay heating bills. Additional state energy assistance and fuel fund programs may be available to help households during a winter emergency.