Why is heating oil so expensive?
Five drivers, weighted by how much they move your $/gal. EIA
1. Crude oil (biggest line, weighted ~43%)
Brent and WTI set the floor. Hormuz events, OPEC+ cuts, US shale curve, all flow through. See heating oil vs crude.
2. Refining margin (~11%, but volatile)
Crack spread. Distillate-heavy refineries fix or shut over summer. Winter crack widens when distillate inventories draw. EIA
3. Distribution and marketing (~18%)
Terminal storage, rack to truck, dealer overhead. Most stable line. Rises when terminal inventories thin.
4. Dealer margin (~21%)
The line a homeowner can negotiate. Will-call vs pre-buy vs cap directly affects what margin your dealer captures. Dealers running large cap-programme books need higher margin on will-call to offset.
5. Tax (~7%)
State-variable. No federal excise on dyed #2 (unlike on-road diesel). State surcharges exist in CT, MA, NY.
FAQ
Why is heating oil more expensive than gasoline?
Heating oil and diesel share the distillate cut of the barrel. In winter, refiners shift toward distillate but never fully offset demand. Distillate is also taxed less but priced higher in winter due to crack spread.
Why is the Northeast more exposed?
PADD1A consumes ~80% of US residential heating oil. Northeast inventories are thinner and refining capacity has shrunk (Bayway, Trainer are exceptions). Imports from Canada and Europe fill the gap, adding logistic premium.
What changed since the 2014 crude crash?
Northeast inventory infrastructure shrunk. Several refineries closed. Imports rose. The region is more sensitive to crack spread and shipping logistics than it was pre-2014.
EIA SHOPP last reading: 2026-03-30NYMEX HO settled: 2026-07-13EIA next release: 2026-10-05