Part 2: Where does oil come from?
Science is a beautiful thing. Most geologists today agree that crude formed over millions of years from the remains of tiny aquatic plants and animals that were exposed to the combined effects of time and temperature. In other words, oil forms from organic matter that is either "cooked" deep within the earth for long periods of time at low temperatures, or "cooked" for short periods of time at high temperatures. Yum! We’ll have seconds.
So where does this stuff come from besides the ground? The United States get it from two places - Domestic refineries (here in our own backyard and we also Import from other countries (Not like Heineken Imports, but we like where your mind is at.)
Well I’ll be!
Squirrels aren’t the only people that stock up for the winter. Did you know winter inventories are built up during summer and fall? The people (or refineries) that actually produce it have limitations on the amount they can make to meet consumer demand during the winter heating season. Refiners can increase production in the winter, but that means they also have to produce greater amounts of other petroleum products. SO, if no market exists for larger volumes of those other petroleum products, this lack of demand may limit the amount of extra that they produce. They’re kinda living within their means and using the entire barrel of crude. SO they may make it in the summer and store it for Fall/Winter since there could be a demand for it's bi-products. During the winter suppliers use these stored inventories to help meet demand.
Imports supplement domestic production (Remember that thing about Heineken?).
The United States imports heating oil from other countries to supplement U.S. refinery production and inventories. Most U.S. imports of distillate come from Canada and Russia and are imported into the East Coast, where the majority of U.S. residential consumption occurs. On average, East Coast distillate imports are highest during the winter months to help meet demand.
How is it transported to customers?
And, after all that, there’s a way this black gold gets to your house. It just doesn’t appear. Refiners and other suppliers send it to storage terminals for distribution to consumers. For example, much is delivered to a central distribution area, such as New York Harbor. From New York Harbor, it is redistributed by barge to other consuming areas like New England. From its New England destination, it is trucked to smaller storage tanks close to retail dealers' customers, or the heating oil is delivered directly to customers.
Fun Fact: Only 7% of U.S. households use heating oil and this usage is mostly concentrated in the Northeast. Shipping costs play a crucial part in this regional distribution as the consumer price is also related to the shipping distance.
And there you have it! We can hear you getting smarter.
Stay Warm!
