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History of the Heating Oil Industry

The heating oil industry has been supplying home heating products and services in the United States for a long time. Back in the 1940s, oil became the new primary heating source in the United States. Oil, in comparison with coal, the fuel used before, was cleaner, less expensive, and more efficient. It was for this reasons that it was used and is still utilized in the United States as well as in the rest of the world. Because of this, many delivery companies that used to sell ice and coal became retailers of heating oil, and subsequently, the industry grew increasingly through the post-war years. Most of these heating oil businesses were, and some still remain, family-owned, and have been in the industry for many generations. Due to this particularity, the heating oil industry possesses a unique position within the United States marketplace. Its abundance of small businesses promotes an strong competition which often leads dealers to develop personal bonds with their customers and provides services even in adverse weather conditions or out of office hours to retain clients.

In the present day, heating oil functions as a home heating fuel for more than eight million out of 107 million households in the United States. Of these families, more than six million—or 78 %—are located in the Northeast, including regions such as New England and the Central Atlantic states. However, in the past thirty years, the number of homes using heating oil has dropped abruptly, as consumers switched from oil to natural gas, propane, or electric heat pumps. The amount of households that use oil for home heating has declined from approximately 20 % in 1975 to less than 10 % in the late 1990s. Today, the number of new homes constructed using oil as their heating oil accounts for only a 4 %.

The heating oil supply in the United States comes from domestic refineries but it is also imported, principally from Canada, the Virgin Islands, and Venezuela. The oil is refined on a seasonal basis, being the summer and fall months the time when the majority of refining occurs. The heating oil is then stored in regional inventories.

In the year 2000, after a exceptionally cold Northeast winter, when stocks of heating oil were stretched thin and prices got to the ceiling in response to the shortage, President Clinton established the Northeast Heating Oil Reserve, along with several branches in New Haven, CT, Woodbridge, NJ, and Providence, RI, in order to protect heating oil consumers from major price fluctuations. This reserve can hold more than 2 million barrels of oil and was created by moving and displacing crude oil from the Strategic Petroleum Reserve.

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