Heating Oil

By: EconomyWatch   Date: 30 June 2010

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Heating oil is a flammable liquid crude-oil by product, which is used for fueling building furnaces and boilers. It is generally used in residential complexes as a substitute for kerosene.

Types and Uses of Heating Oil

Heating oil is generally distributed in the following versions:

  • Heating oil #2: This is the cleanest form of heating oil, which also makes it the most expensive. It is capable of vaporizing at low temperatures. Heating oil #2 is most commonly used in residences.

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  • Heating oil #4: This is a hybrid of heating old # 2 and #6. It is capable of combustion even in the absence of a heated storage system. Heating oil #4 is generally used in large power plants and commercial boilers.

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  • Heating oil #6: This is the dirtiest version of heating oil, which makes it the cheapest. This oil is also known as residual oil and is chiefly used for creating asphalt.

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    Benefits of Heating Oil

    Heating oil has the following advantages:

    • Cost-effective: It is cheaper than other forms of energy, such as LPG and electricity. Heating oil is up to 5.5 times cheaper than electricity.

    • Cleaner: It is a clean form of energy, since it can burn up to 400 degrees hotter than electricity and natural gas. Hence, it uses less fuel and heats faster.

    • Safe: Unlike LPG and natural gas, heating oil is non-flammable at room temperature. This is because its flash point (lowest temperature at which it can burn) is about 140°F.

    • Environmentally safe: It is non-toxic and biodegradable.

    Factors Affecting Crude Oil Prices

    Heating oil prices are influenced by different factors, including:

    • Season: The demand for heating oil is higher in colder seasons. This results in higher prices during the winter months.

    • Crude oil prices: Any fluctuation in the prices of crude oil invariably affects the prices of heating oil. This is because heating oil is a by-product of crude oil.

    • Local competition: Heating oil prices are generally low in regions that have a large number of dealers. This is because the dealers lower prices to acquire a larger market share.

    • Distribution costs: Heating oil prices are higher in remote regions due to inefficient and costlier distribution channels.

    Heating oil comprises approximately 25% of the total yield of crude oil barrel. This constitutes the second largest share of crude oil products, after gasoline.


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