If you have a furnace, boiler, or water heater in your home, it might be using heating oil. Not all home heating systems use heating oil, but a vast majority over the years (before electric systems) have typically used heating oil as the fuel source.
While it’s something homeowners rely on every winter, the details of how important it is often get overlooked until your tank runs low.
At DollarWise Oil, we believe knowledge is power (and in this case, it’s also warmth!) Let’s break down what heating oil is, how it works, and why it continues to be one of the most reliable and cost-effective ways to heat your home.
Heating oil is a petroleum product refined from crude oil. Think of it as the cousin of diesel fuel, designed specifically for residential and commercial heating systems. In fact, heating oil and diesel are so similar that they could technically be used interchangeably; one of the biggest differences is that heating oil is dyed (usually red) to distinguish it from taxed diesel fuel used in vehicles.
Heating oil is stored in a tank on your home’s property and delivered by a heating oil provider as needed. When your thermostat calls for heat, your furnace or boiler draws oil from the tank, mixes it with air, and burns it in a combustion chamber.
Hot air or water is produced and circulates through your home to adjust the temperature to the required comfort level you’ve set. The same is true for your water heater if it runs on heating oil as its fuel source.
Heating oil is produced from crude oil through a refining process that separates petroleum into various products, such as gasoline, jet fuel, diesel, and lubricants.
Most home heating oil in the U.S. is called No. 2 fuel oil (#2 heating oil), which is clean-burning and highly efficient. In recent years, many suppliers (including DollarWise Oil) have transitioned to ultra-low sulfur heating oil (ULSHO), which dramatically reduces emissions and helps improve system longevity.
In short, heating oil today is cleaner and more environmentally friendly than ever before.
Heating oil is typically dyed red. This is more than just a cosmetic detail. In fact, the IRS requires heating oil be dyed red to indicate that the fuel is not subject to the taxes applied to on-road diesel. So, if you peek into your tank or take a sample, don’t be alarmed by the ruby hue. That’s how it’s supposed to look!
The most common use of heating oil is, of course, home heating. Furnaces and boilers burn heating oil to produce warm air, steam, or hot water that circulates throughout your home.
But heating oil can also be used for:
At its core, heating oil is all about reliability. Unlike natural gas, which requires pipeline infrastructure, heating oil is delivered directly to your home and stored on-site, giving you control over your own supply.
Even with other energy options available, millions of U.S. households continue to depend on heating oil every winter. Here’s why:
The amount of heating oil you’ll use depends on factors like home size, insulation quality, local climate, and furnace efficiency. According to the U.S. Energy Information Administration, a 2,500-square-foot home in the Northeast uses about 700–900 gallons of heating oil per year.
Want a clearer picture? With tools like the Smart Oil Gauge, you can monitor real-time tank levels, track usage trends, and even receive low-tank alerts, so you never run out unexpectedly.
One of the biggest questions homeowners have is: what will this cost me? Heating oil prices can fluctuate daily based on global crude oil markets, local demand, and seasonal factors. At DollarWise Oil, we keep things transparent with regularly updated heating oil prices for every state we serve, so you always know what you’ll pay before placing an order.
The good news is that unlike utilities, you’re in control of when and how much oil you buy. This flexibility lets savvy homeowners save money by ordering when prices dip. Read our heating oil cost-saving tips for more ways to save on heating oil.
Additionally, we always sell the cheapest heating oil so you can afford to keep your tank full during the cold winter season.
Ordering heating oil has never been easier. You don’t even have to make a phone call. With DollarWise, you can:
Our fast, reliable service is here for you whenever you need it!
Heating oil is quite safe. In its liquid state, heating oil is not flammable at room temperature. It needs to be vaporized and ignited under controlled conditions inside your home’s heating system.
Of course, safety also comes down to maintenance. Having your system inspected annually and keeping your tank in good condition ensures everything runs smoothly. Read our heating oil safety tips to make sure your heating oil system is as safe as possible.
Heating oil remains a tried-and-true solution for reliable, powerful home comfort. From what it’s made of to how it’s used, understanding the basics helps you make smarter choices about your energy needs. With tools like the Smart Oil Gauge, transparent Heating Oil Prices, and easy online ordering, DollarWise Oil makes heating your home simple, affordable, and stress-free.
Ready to take control of your comfort this winter? Order Heating Oil Online today and experience the DollarWise difference.
Heating oil and diesel are both petroleum distillates, but diesel is taxed for on-road use while heating oil is dyed red for untaxed residential use. Heating oil cannot legally be used in vehicles.
It is No. 2 fuel oil, a low-viscosity distillate made of hydrocarbons with 14–20 carbon atoms.
No. Kerosene condenses at lower temperatures (160–250 °C) and is often used in the U.K. as domestic heating oil, while standard U.S. heating oil condenses at 250–350 °C.
A petroleum-based fuel used in furnaces and boilers for space or water heating.
Natural heating oil is light gold, but commercially sold heating oil is dyed red to indicate it is untaxed.
Yes. More than five million U.S. households, mainly in the Northeast, still rely on heating oil for home heating.
Gas oil/red diesel fuels off-road vehicles and machinery, while heating oil is used for residential and commercial heating. Taxation and dyeing rules differ.
Consumption is concentrated in New England and the Mid-Atlantic states, where winters are coldest.
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