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Many people remember when heating oil was always cheaper than gasoline. Why are heating oil prices almost always higher than gasoline?

Let’s look at several reasons why what we see now is different than what we remember. Fracking in the United States has brought down energy prices not only for the US but for the whole world. Fracking has produced crude oil that is easier to make into gasoline than into diesel/heating oil. Not only that but demand for diesel and heating oil has maintained yet the relative demand of gasoline has gone down vs heating oil-diesel-jet fuel. Heating oil is the same as diesel and nearly the same as jet fuel. Diesel and jet fuel consumption has been rising.

Heating oil prices move along with crude prices in general. Yet demand and the ability of refiners to make diesel/heating oil is partially affected by the types of crude oil available for processing. Light crude that the United States is generating from fracking is more easily turned into gasoline than heating oil. When trying to make diesel you can get a over supply of gasoline. This demand for oil vs gasoline drives down gas prices while a commensurate decrease in heating oil supply drives up the price of diesel and heating oil. Notice the price of diesel at the pump and you get the indication of the heating oil prices relative to gasoline.

Heating oil and diesel are interchangeable except for fuel burning additives that are added to diesel fuel to protect engine parts. Look at the pump prices when you gas up and check out diesel prices and gasoline.

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