America’s Oil and Natural Gas Industry
Heating Oil Prices: An API Fact Sheet
Forecasts from the U.S. government and private groups are
predicting continued strong heating oil prices, but lower this
year than last. Many Americans want to understand why they
are paying what they are paying. API has assembled this fact
Consumer Expenditures on Winter Fuels (October 1 through March 31)
2007–2008
2008–2009
$1,953
$1,681
$1,570
$858 $860
Natural Gas Heating Oil
Source: EIA Short-term Energy Outlook, December 2008
Average Price of Crude Oil ($ Per Barrel)
Year-To-Date Distillate Production through October 3 of Each Year (in million barrels per day)
sheet to help consumers better understand the components
that go into heating oil prices and what steps they can take to
lower their own consumption.
Winter Fuel Outlook
Average consumer heating expenditures forecasted to
be down this winter
Consumer expenditures for home heating this winter are
$1,472 expected to be lower than last winter. According to the U.S. Energy
Information Administration, the average winter heating bill for all
fuels is expected to drop 2 percent, or by nearly $19, to $971.
$861 $929 For those households heating with heating oil, prices could be
down 19.6 percent, or about $383, to an average expenditure
of $1,570. Only 7 percent of U.S. households depend on heating
oil for winter fuel and most of these households are in the
Propane Electricity
Northeast, where 31 percent of house-holds use heating oil
as their primary space heating fuel. EIA’s forecasts for homes
heated with other fuels include an average price drop of 12.4
percent for propane, an increase of 0.2 percent for natural gas,
and an increase of 7.9 percent for electricity.
Crude Oil
Crude oil prices are the biggest factor affecting
heating oil prices
This summer, early buyers of heating oil faced much higher
prices than last year in large part because of record-high crude
oil prices. Recently, though, crude oil prices have fallen sharply
as forecasts for worldwide demand have been trimmed as a
result of the economic slowdown. Crude oil is the single largest
component of heating oil, so when crude oil costs are higher,
heating oil prices are likely to be higher. Conversely, when crude
oil prices are lower, heating oil prices are usually lower.
Increased Demand for Diesel
Increased diesel demand has affected heating oil supplies
Heating oil and diesel fuel are closely related products. Both
are distillates and are generally made together during the
refining process. Only the last steps are different. When
demand for on-highway diesel increases, refiners often
generate a greater proportion of diesel than heating oil from
the distillate stream, and vice versa when heating oil demand
increases. Over the past year, until just recently, global highway
diesel demand has been much stronger than a year ago,
causing much of the distillate yield to go toward diesel.
Worldwide diesel demand has been propelled mainly by
economic growth, particularly in developing nations, as well
as a push in Europe to increase the usage of diesel vehicles.
More than half of European cars are fueled by diesel.
 Northeast Distillate Inventories Inventories Complicated by Hurricanes
60
Northeast inventory levels lower than average, output up
50 In the Northeast, where the vast majority of the nation’s heating
oil is consumed, distillate inventories as of October 31, were
40 17.8 percent below the five-year average, in part because of
Million barrels

strong diesel demand and also because of widespread refinery

30
outages in the Gulf Coast region following hurricanes Gustav
20 Range, 2003-07
and Ike. However, over the past five years, the main sources
2008 of heating oil supplies from December through February have
10 Average, 2003-07 been imports and refinery production, with inventories only
meeting about 3 percent of demand. Through October 31 of
0
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. this year, U.S. refineries have been producing an all-time record
Source: API Weekly Statistical Bulletin amount of distillate – mostly diesel – to meet demand in
America and abroad. For the four weeks ending October 31,
U.S. distillate production was the highest ever for the same
period. The production of heating oil traditionally ramps up in
autumn in expectation of increased, winter-related demand.

Help and Resources

Finding the money to pay heating bills can be difficult for
some consumers, particularly lower income Americans.
Energy assistance, including help with utility bills or programs
to reduce energy usage by improving the energy efficiency of
a home, is available for lower-income households through
federal programs administered by state offices, and also
through private programs. Both home owners and renters
are eligible for these programs, which can be found on the
Department of Energy’s web site at:
http://apps1.eere.energy.gov/state_energy_program/
seo_contacts.cfm.

Household Tips Other Ideas:

Cover drafty windows with heavy-duty clear plastic film

There are a number of no- or low-cost methods Americans can
use to save energy during the winter months. Simply reducing
the thermostat by 10 to 15 degrees for eight hours a day –
Install tight-fitting, insulated drapes or shades

Take advantage of the heat from the sun by opening
while you are out of the house or asleep – will help you save
about 10 percent a year on your heating bill. A programmable
thermostat can make it easy to set back your temperature. curtains on south-facing windows during the day

Find and seal air leaks

Because your water heater can account for 14 to 25 percent
of the energy consumed in your home, consider turning down

Stop cold air from coming down the flue of your fireplace
the temperature of your water heater to the warm setting of
120 degrees. Also consider having an energy audit of your
by keeping the damper closed unless a fire is going
home to determine if there are ways you can easily reduce
your home-heating consumption.
Consider replacing appliances and heating and cooling
equipment with more energy efficient (Energy Star) models.

Schedule regular maintenance of your heating/cooling

system, including replacing your furnace filter regularly

Insulate your water tank to hold the heat inside

For more information, visit www.api.org/aboutoilgas
or www.energytomorrow.org.

API Creative: 2008-243K | 12.19.08 | PDF