Market Volatility and Policy Uncertainty in the Heating Oil Industry

In 2024, the heating oil market has experienced wide ranging price fluctuations. Understanding the effects of changing energy policy, supply chain disruptions and global political events can help heating oil businesses better navigate the future heating oil market.

One policy change contributing to market volatility in the heating oil market is the upcoming replacement of the Blenders Tax Credit (BTC) with Clean Fuel Production Credit (CFPC) starting January 1, 2025.  The differences between the BTC and the CFPC are likely going to influence the heating oil industry’s future.  

Jason Lawrence, Chevron manager of the heating oil segment

The BTC offers a per-gallon tax credit for biodiesel and renewable diesel, that can be used for in-home heating oil while the CFPC potentially provides benefits for additional renewable energy sources like hydrogen, wind, geothermal and closed-loop biomass. Fuels will be incentivized based on carbon intensity, meaning the Clean Fuels Production Credit (CFPC) may impact the feedstock values.

The CFPC credit is earned by the producer of the qualifying fuel rather than the blender¹. To qualify for credit under the CFPC, the fuel must be produced in the U.S., meaning the imported fuel is not eligible.

The legislative outlook for these tax credits is a hot topic in Congress, with potential outcomes that could have a significant impact on the industry. The regulatory uncertainty impacts the values that will be applied to feedstocks in the future, which creates increased risk for producers as they plan their strategy for 2025. The economic impact of these policies is far-reaching, with cost implications that could affect heating oil prices and, consequently, consumer costs. Businesses are navigating this uncertainty in their investment and operational strategies, making calculated decisions to stay ahead.

Supply Assurance

Despite market fluctuations, the EPA is focused on stability². Chevron’s feedstock flexibility allows us to use a mix of feedstocks, such as used cooking oil, soybean oil and distillers corn oil. With the anticipated increase in demand and corresponding elevated production of renewable fuels, we are expanding sources and the availability of the long-term supply of feedstocks. This helps to meet the needs of our customers which depends on their requirements and applications. We see this as a good opportunity for innovation in the coming years; not only to enhance our access and utilization of feedstocks that are currently available to us, but also to locate, develop and utilize new or novel feedstocks.   

Regardless of the feedstock used, Chevron’s biofuels meets or exceeds the ASTM specification. We are currently focusing on commercializing winter oilseed crops that can be harvested and using the oil for biofuels production. 

As a leader in the heating oil industry, Chevron leverages decades of experience to help businesses navigate complexities and to provide timely resources, insights and support. 

Jason Lawrence, Chevron manager of the heating oil segment in the Northeast, provides additional information and insights that can be downloaded below. 

We are here to support you as best we can with the utmost expertise, ensuring optimal performance. Together, we can achieve a more efficient and  a lower carbon intensity solution.

Contact Jason Lawrence For More Information

1 https://stillwaterassociates.com/so-long-btc-hello-cfpc/

2 https://www.epa.gov/newsreleases/epa-finalizes-new-renewable-fuel-standards-strengthen-us-energy-security-support-us: