<p>I would expect the gasoline market to be more competitive than heating. Transporting heating oil into homes requires large infrastructural investment and high fixed costs, so you'd expect there to be more market power concentrated in a fewer number of firms, driving the price of it up. Creating gasoline for sure requires a lot of investment too, but not for nearly a large area I would imagine.</p>

<p>So basically, consider heating oil an input for a "utility" sort of company, which acts as a natural oligopolist/monopolist. I'm not exactly sure what the market looks like here in the United States, but this is my best guess. Someone else can probably elaborate on this answer or provide an alternative suggestion.</p>

CC BY-SA 3.0
2015-10-19T23:35:52.020Z
2015-10-19T23:35:52.020Z
Kitsune Cavalry
<p>Home heating oil is essentially diesel minus red dye.</p>
<p>The first thing to realize is that overall oil is refined into multiple products, always.  A refinery is always making some diesel, some gasoline, some kerosene (jet fuel) and some light ends (C4 and below) and some heavier fractions.  Diesel, gasoline and jet are the most desirable fractions and towards the middle of the barrel in density, chain length.  Refineries try to make the most of the desirable products, but it's impossible to make all.  Some light and heavy end is produced and sold.</p>
<p>Diesel and gasoline are typically antiseasonal.  There is more demand for gasline in the summer (passenger automibile travel) and more desire for diesel (trains and trucks are flattish seasonally and HHO is of course driven by cold).  So you don't refine for one or the other.  You just try to adjust the mix (as much as you can) to correlate to seasonal desires.  (Imports also have a role...traditionally the Us imported gasoline and exported diesel because Europe had many diesel passenger cars and the US did not.)</p>
<p>Traditionally, diesel and gasoline have been bvery similar in prices albiet diesel slightly cheaper.  This has changed over time because of various factors (supply and demand).  Probably the major driver has been the increased environmental regulations to reduce sulfur.  Sulfur tends to concentrate in the heiver fractions and diesel is heavier than gasoline.  It costs money to clean up the sulfur to meet modern pollution requirements.  But there are other factors also (growth of light oil from shale for instance).</p>
<p>P.s. Refinery economics is a fascinating topic with linear programmed models to adjust the tweaks that are within refinery control and to look at markets for oil (different grades, different cargoes even) and output market pricing (for multiple products).  Refineries typically have a full time person on both the oil buying side and the products selling side, and a person overseeing them, and complex models and humans looking at the models and the situation (even considering things that the model doesn't, like upcoming maintenance, etc.)</p>

CC BY-SA 4.0
2022-11-06T04:28:09.170Z
2022-11-06T04:34:05.107Z
2022-11-06T04:34:05.107Z
guest
<p>Heating oil always used to be cheaper than gasoline until gas demand dropped a few years ago and the demand for heating oil was still there.  The short answer is they charge more because they can. Just as in northern Maine the price differential for a gallon of gas is 40 cents per gallon. It cost 5 cents or less per gallon to transport but there is always at least a 20 cent or more premium. They charge more because they can. It's all about the money!</p>

CC BY-SA 4.0
2018-11-27T19:56:00.567Z
This is kind of a non-answer. There could be regulatory reasons, taxes, and a range of other reasons. Heating oil certainly used to be substantially cheaper than gasoline and it is not now. You comment on this saying that gas demand dropped, but don't really offer any evidence or further explanation of this. As far as I know, gasoline consumption in the United States has been generally steady in the last 2 years.
Lassie Fair
CC BY-SA 4.0
2018-11-27T19:47:34.350Z
2018-11-27T19:47:34.350Z
Ron Leonard
<p>I see that "heating oil", which I presume to mean No. 2 fuel oil, is more expensive than gasoline:</p>

<p><a href="https://i.sstatic.net/6Aph3.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/6Aph3.png" alt="enter image description here"></a></p>

<p>My understanding was that fuel oil is much easier to refine than gasoline and more of it is produced per barrel of crude than gasoline is produced. Why then is it more expensive?</p>

CC BY-SA 3.0
2015-10-20T05:26:06.827Z
Please can you provide a source for these numbers? And please do give us the metadata: what time, which geographic area? These could be spot, or July 2016 forward contracts, or something else. They could be New York, Alaska, Hawaii, or somewhere else.
410 gone
CC BY-SA 3.0
2016-02-21T10:17:35.737Z
http://www.marketwatch.com/story/cheap-oil-who-cares-homeowners-prefer-natural-gas-2014-12-18


The heating oil industry is fighting back by blending fuels distilled from soybean oil, corn oil and other vegetable and animal fat into its products. Sweetser said these biofuels blend burn cleaner and pollute less, and could help oil retain or grow its share of the heating market. “I certainly wouldn’t count out the heating oil industry, particularly as they move into the bio heat future,” he said. -- Who knows what is actually in heating oil these days.
D J Sims
CC BY-SA 3.0
2018-02-11T17:05:27.570Z
Gasoline has a lot of tax that oil doesn't have maybe its just old fashion price gouging.Where are the elected voices?
Douglas Rogers
<commodities>
Heating oil more expensive than gasoline?
Lassie Fair
# Heating oil more expensive than gasoline?

(Asked by: username_0 on 2015-10-19)

I see that "heating oil", which I presume to mean No. 2 fuel oil, is more expensive than gasoline:

[![enter image description here](https://i.sstatic.net/6Aph3.png)](https://i.sstatic.net/6Aph3.png)

My understanding was that fuel oil is much easier to refine than gasoline and more of it is produced per barrel of crude than gasoline is produced. Why then is it more expensive?

**Tags:** commodities
> **Comments:**
> **username_1**: Please can you provide a source for these numbers? And please do give us the metadata: what time, which geographic area? These could be spot, or July 2016 forward contracts, or something else. They could be New York, Alaska, Hawaii, or somewhere else.  
> **username_2**: http://www.marketwatch.com/story/cheap-oil-who-cares-homeowners-prefer-natural-gas-2014-12-18   The heating oil industry is fighting back by blending fuels distilled from soybean oil, corn oil and other vegetable and animal fat into its products. Sweetser said these biofuels blend burn cleaner and pollute less, and could help oil retain or grow its share of the heating market. “I certainly wouldn’t count out the heating oil industry, particularly as they move into the bio heat future,” he said. -- Who knows what is actually in heating oil these days.  
> **username_3**: Gasoline has a lot of tax that oil doesn't have maybe its just old fashion price gouging.Where are the elected voices?  

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## 3 answers

### Answer by username_4 on 2015-10-19. Score: 3

I would expect the gasoline market to be more competitive than heating. Transporting heating oil into homes requires large infrastructural investment and high fixed costs, so you'd expect there to be more market power concentrated in a fewer number of firms, driving the price of it up. Creating gasoline for sure requires a lot of investment too, but not for nearly a large area I would imagine.

So basically, consider heating oil an input for a "utility" sort of company, which acts as a natural oligopolist/monopolist. I'm not exactly sure what the market looks like here in the United States, but this is my best guess. Someone else can probably elaborate on this answer or provide an alternative suggestion.


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### Answer by username_5 on 2022-11-06. Score: 1

Home heating oil is essentially diesel minus red dye.

The first thing to realize is that overall oil is refined into multiple products, always. A refinery is always making some diesel, some gasoline, some kerosene (jet fuel) and some light ends (C4 and below) and some heavier fractions. Diesel, gasoline and jet are the most desirable fractions and towards the middle of the barrel in density, chain length. Refineries try to make the most of the desirable products, but it's impossible to make all. Some light and heavy end is produced and sold.

Diesel and gasoline are typically antiseasonal. There is more demand for gasline in the summer (passenger automibile travel) and more desire for diesel (trains and trucks are flattish seasonally and HHO is of course driven by cold). So you don't refine for one or the other. You just try to adjust the mix (as much as you can) to correlate to seasonal desires. (Imports also have a role...traditionally the Us imported gasoline and exported diesel because Europe had many diesel passenger cars and the US did not.)

Traditionally, diesel and gasoline have been bvery similar in prices albiet diesel slightly cheaper. This has changed over time because of various factors (supply and demand). Probably the major driver has been the increased environmental regulations to reduce sulfur. Sulfur tends to concentrate in the heiver fractions and diesel is heavier than gasoline. It costs money to clean up the sulfur to meet modern pollution requirements. But there are other factors also (growth of light oil from shale for instance).

P.s. Refinery economics is a fascinating topic with linear programmed models to adjust the tweaks that are within refinery control and to look at markets for oil (different grades, different cargoes even) and output market pricing (for multiple products). Refineries typically have a full time person on both the oil buying side and the products selling side, and a person overseeing them, and complex models and humans looking at the models and the situation (even considering things that the model doesn't, like upcoming maintenance, etc.)


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### Answer by username_6 on 2018-11-27. Score: 0

Heating oil always used to be cheaper than gasoline until gas demand dropped a few years ago and the demand for heating oil was still there. The short answer is they charge more because they can. Just as in northern Maine the price differential for a gallon of gas is 40 cents per gallon. It cost 5 cents or less per gallon to transport but there is always at least a 20 cent or more premium. They charge more because they can. It's all about the money!

> **Comments:**
> **username_0**: This is kind of a non-answer. There could be regulatory reasons, taxes, and a range of other reasons. Heating oil certainly used to be substantially cheaper than gasoline and it is not now. You comment on this saying that gas demand dropped, but don't really offer any evidence or further explanation of this. As far as I know, gasoline consumption in the United States has been generally steady in the last 2 years.  

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