Heating oil is brought into oil storage terminals in an area by refiners and other suppliers. For example, heating oil may be delivered to a central distribution area, such as New York Harbor, where it is then redistributed by barge to other consuming areas, such as New England. Once heating oil is in the consuming area, it is redistributed by truck, to smaller storage tanks closer to a retail dealer's customers, or directly to residential customers. In 1999, crude oil accounted for approximately 48 percent of the cost of a gallon of heating oil. Heating oil prices paid by consumers can vary over time and by where a consumer lives.
Prices can change for a variety of reasons.
A homeowner in the Northeast might use 650-1,000 gallons of heating oil during a typical winter, while consuming very little during the rest of the year. Crude oil prices are determined by worldwide supply and demand. Demand can vary worldwide with the economy and with weather. Heating Oil Prices Follow Crude Oil Competition in local markets - Competitive differences can be substantial between a locality with only one or a few suppliers or dealers versus an area with a large number of competitors. Consumers in remote or rural locations may face higher prices because there are fewer competitors.