WHY ????

Hijinx

Well-Known Member
I know there are some smart people on this forum so I am asking a question I would like an answer to.

Diesel fuel and home heating fuel are the same thing except they put dye in one and not the other.

I just had my heating fuel tank filled. The price was and is $5.98 cents a gallon.

Why is heating fuel higher than diesel when there is tax on diesel and none --supposedly--on home heating fuel.
 

HemiHauler

Well-Known Member
I know there are some smart people on this forum so I am asking a question I would like an answer to.

Diesel fuel and home heating fuel are the same thing except they put dye in one and not the other.

I just had my heating fuel tank filled. The price was and is $5.98 cents a gallon.

Why is heating fuel higher than diesel when there is tax on diesel and none --supposedly--on home heating fuel.

Simple. The cost of our home heating fuel has to cover the cost of delivering it to our homes. Those costs include driver salary/benefits, office overhead, wear & tear on trucks, etc.

This stuff isn’t exactly rocket science.
 

LightRoasted

If I may ...
For your considerations ...

I know there are some smart people on this forum so I am asking a question I would like an answer to.

Diesel fuel and home heating fuel are the same thing except they put dye in one and not the other.

I just had my heating fuel tank filled. The price was and is $5.98 cents a gallon.

Why is heating fuel higher than diesel when there is tax on diesel and none --supposedly--on home heating fuel.
Aside from hemi's snidely remark ....

As you stated correctly, diesel fuel is just undyed heating oil. And in Maryland the total excise tax, including federal, on road diesel is $0.4345, So one can see the margins for heating oil are about as slim as for fueling stations. On the east coast, spot price diesel, as of Oct 31, was $4.793, which does not include delivery costs to stations or heating oil sales companies.

So we have in effect, competition for diesel for road use and for heating use, raising prices, and keeping them near parity with each other. So while heating oil sales companies may get it for for the relatively same cost as a station, they do have their own internal business costs to deal with which raises the cost near to, or slightly higher than, road diesel. Since oil heating businesses are dealing with the same ongoing the massive inflation as every other business, they must charge what they can to offset the dollar losing more of its value. [Trucks need maintenance, employees want to be paid more, insurance cost raising, taxes increasing, regulatory costs, etc..]

Now the smart oil dealers will deal in the commodities futures market and lock in, hopefully at lower, or not significantly higher, prices for future deliveries. And if they are not buying from the futures commodity market, then they are substantially at the market's volatile pricing. Just like we are, since regular folks do not take deliveries from the futures market.

There might be something else, since most heating oil customers have 250 gallon, or more ,tanks, semi-truck fuel tanks are 125 to 300 gallons. So it is a direct competition between the two for that diesel.

Hopefully this answers your question in a more defined way.
 
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