Heating oil (No. 2 fuel oil) is a distillate fuel oil commonly used for household space heating. Technically, No. 2 fuel oil has distillation temperatures of 400 degrees Fahrenheit at the 10-percent recovery point and 640 degrees Fahrenheit at the 90-percent recovery point and meets the specifications defined in ASTM Specification D 396.

A simple definition for fuel oil is a lighter type of oil, or a liquid byproduct of crude oil, which is used for energy, especially in regard to heating. When petroleum is refined, there are two main categories under which it is classified. One is distillate oils, which includes diesel, and the other is residual oils, which includes things like kerosene. Different types of fuel oil are classified under both categories. Distillate fuel oil is the type generally used for home heating.

While gasoline is also a byproduct of the petroleum refining process, it is far less stable than the fuel oil used to heat homes and commercial properties. Even so, the rise and fall of gas prices is generally a good indicator of the stability, or lack thereof, of fuel oil prices. Since the price of crude oil directly affects the price of fuel oil, consumers should be prepared to pay more to heat their homes as the worldwide demand for oil and gas continues to increase.

The costs of refining must also be figured in to the price of fuel oil, as must the costs of transporting and distributing it. When the price of crude oil rises, gas prices go up, so the price of transporting fuel oil does as well. This may be felt even more by families that live in rural locations, requiring longer trips to transport and distribute fuel oil.

Seasonal issues tend to play a role in the price of fuel oil as well. During periods when the demand for gasoline is high, refining companies process less fuel oil for heating. This means that when the demand for home heating oil increases, so will the price, because the supply is limited. This fact often causes the price to rise quickly and sharply.