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
These costs include the profits (and sometimes losses) of refiners, wholesalers, and local distributors.
From the winter of 2011–12 through the winter of 2020–21, the cost of crude oil accounted for 50% of the average price of a gallon of heating oil during the winter months (October through March). Distribution and marketing costs accounted for about 34% of the cost of a gallon of heating oil, and refinery processing costs accounted for 16% of the price.
What is the outlook for heating oil prices this winter?
The October edition of the Short-Term Energy Outlook (STEO) includes the Winter Fuels Outlook with a detailed forecast for winter residential heating oil (and natural gas, propane, and electricity) prices and average household heating fuel consumption and expenditures. Table WF01. Average Consumer Prices and Expenditures for Heating Fuels of the Winter Fuels Outlook has national and regional forecasts for average winter heating fuel prices, consumption, and expenditures, as well as estimates for the number of households that use each type of heating fuel by region and nationally.
Every edition of the STEO also includes forecasts for national-level monthly and annual average retail heating oil prices in Table 2. Energy Prices.
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 limited budgets. 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.
Last updated: October 19, 2021