Wholesale heating oil price vs retail
The retail dollar, line by line
Three bars, two subtractions, and every input is an EIA series on the same week, so you can redo it. Crude is the volatile line. The refining crack is the distillate premium over crude and widens in winter. The last bar is everything between the harbour and your tank: trucking, terminal, overheads and the dealer's margin, which compresses on competition and expands on cap and pre-buy programmes.
There is no tax bar, deliberately. The EIA residential price this is measured against excludes taxes, and excludes cash and high-volume discounts, so tax is not inside the total being split. Residential heating oil is dyed and is not subject to the federal on-road diesel excise either, which is the whole subject of heating oil vs diesel. State-level heating oil taxes do exist in some states and sit on top of this. EIA
Why retail lags wholesale
Crude moves daily. The NY Harbor ULSD spot prints daily. Retail moves weekly, because dealers post a board rate and then recalibrate against rack prices and the oil already in their own tanks. The direction is reliable; the size and speed of the pass-through are not something we have a published coefficient for, so treat the figures on the crude shock page as our own scenario arithmetic rather than a measured elasticity. The practical consequence is the useful part: a spike that fades inside a couple of weeks barely reaches the residential bill, while a sustained move does.
When the spread widens
- Cold snap. Distillate draws spike, refiners switch from gasoline to distillate, but rack pricing leads. Spread widens 30 to 60 days.
- Rack shortage. Local terminal runs short. Dealers pay more, pass through fast.
- Cap programme cohort. Dealers who locked in cap programmes need higher margin on will-call business to offset.
When the spread compresses
- Crude crash. 2014 to 2015 spread compressed as dealers held inventory above market.
- Mild winter. Surplus inventory pressures dealer margin.