7 Tips for Saving Money on Heating Oil

Heating oil is still used to heat many U.S. homes, especially in the Northeast. But except for certain regions, fuel oil is considerably more expensive fuel than natural gas, and thus homeowners with oil-burning furnaces or boilers have a good incentive to pay as little as possible and to do what they can to conserve on fuel use.

Considering Furnace Replacement?

Nationally, a fuel-oil furnace or boiler costs about $2500 per year on average to operate, while a natural gas furnace/boiler consumes an average of $800 in annual fuel costs. Therefore, if you are in the market for new furnace or boiler, it would seem to make sense to change to a model that burns natural gas. For this reason, more than 50 percent of homes are now heated with natural gas, vs. about 6 percent that burn heating oil. But in some regions of the U.S., fuel oil costs are quite competitive with natural gas. Further, modern oil-burning furnaces and boilers are now quite efficient, easily meeting EPA standards for emissions. Before picking a new furnace or boiler, do your homework on energy costs in your region.

Here are seven tips for conserving on heating oil costs for your home heating system.

  • 01 of 07

    Comparison Shop

    Man filling up heating oil tank

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    Just because you had the cheapest fuel-oil provider last year, doesn't mean they will be the cheapest this year. Call around to compare oil prices, and if you find a better deal, go after it.

    Before you switch companies, give your current provider a chance to match their competitor's price. If they're willing to deal, it'll mean less paperwork for you.

  • 02 of 07

    Fill Up in the Off Season

    Man filling heating oil tank

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    As with any commodity, oil prices rise and fall based on demand. Have your tank filled in the summer when everyone else is thinking about iced tea and air conditioning, while fuel prices are typically at their low point for the year.

  • 03 of 07

    Join a Co-Op

    Heating Oil Delivery

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    Fork over $25 to $30 for a membership to a fuel co-op to gain access to discounted oil rates, which can shave as much as 20 percent off of your heating costs. How's that for a return on your investment?

  • 04 of 07

    Seek Out Discounts

    Technical support operator with headset working at laptop and computer

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    Each year, call your oil company's customer service desk and ask them to run through all the available discounts with you. If you hear anything that you qualify for (and aren't getting), work with them to get it set up.

    Some companies offer discounts if you are filling a large tank, or if you are a senior citizen or military veteran.

    Continue to 5 of 7 below.
  • 05 of 07

    Compare Pricing Options

    Woman working at laptop

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    Heating oil prices are constantly on the move. Choose a pricing plan that makes the most of those movements, and you could save big. Three common pricing options include:

    Market price: You pay whatever the going rate is on the day of delivery. There's no contract, and you have to schedule deliveries when you need them. This is a good option if you only want to fill up when prices are low.

    Fixed price: You lock in a price for the year. It doesn't go up or down—even if the current rate moves up or down. This is a good option if you think increases are likely, or you want to limit budget surprises.

    Capped price: You're protected from large increases (rates can't go past a certain level), and your prices can still go down if the current price drops. This is a good option if you think a price drop is likely.

  • 06 of 07

    Avoid Extra Fees

    Disgruntled woman on phone with bank
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    Don't let a bunch of hidden fees gobble up all your discounts. Each time you call to schedule a delivery, ask for a breakdown of your bill. If anything sounds excessive or unnecessary, question it. Common fees include delivery charges, fuel surcharges, and premiums charged for deliveries made after hours, on weekends, or during bad weather. You may be able to avoid some of these fees simply by careful scheduling of your deliveries.

  • 07 of 07

    Use Less Heating Oil

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    Using cheap oil is good, using less oil is better. Once you've done everything you can to reduce your oil costs, work to cut back on how much you're using. Here are some places to start:

    • Have your furnace tuned up once a year to keep it working efficiently.
    • Conduct a home energy audit to identify spots that need more insulation, caulk, or weatherstripping.
    • Use a programmable thermostat or smart thermostat to automatically turn down the heat when you're not at home.
    • Dress in layers and drink warm beverages, so you can turn the temperature down a few degrees without being uncomfortable.

If you still have trouble affording your oil costs even after implementing these cost-cutting measures, ask local public agencies about any assistance programs that might be available. There may be subsidy programs or budgeting help that can reduce your heating oil costs.