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Why is Home Heating Oil Dyed Red?

Posted on April 29th, 2014

In the daily operation of an environmental consulting firm we address various questions to home owners and businesses alike. One particular question that seems to pop up fairly often is why home heating oil (No. 2 fuel oil) is “dyed” red. It has a lot more to do with taxes then aesthetics.

In the daily operation of an environmental consulting firm we address various questions to home owners and businesses alike.  One particular question that seems to pop up fairly often is why home heating oil (No. 2 fuel oil) is “dyed” red.  It has a lot more to do with taxes than aesthetics.  

No. 2 heating oil and diesel fuel are essentially interchangeable.  According to the NJ Division of Taxation, diesel fuel in NJ is currently taxed at 17.5 cents per gallon with a Federal tax rate of 24.4 cents, totaling 41.9 cents per gallon.  In comparison, residential heating oil in NJ is tax exempt.  Prior to October 1, 1993 some unscrupulous transportation companies were using home heating oil in diesel engines to skirt state and federal roadway taxes.  On October 1, 1993 the federal government required that home heating oil be dyed to discourage this form of tax evasion.  It should be noted that most of the taxes imposed on diesel fuel are used for roadway repair and construction.  

So next time you’re on the Turnpike, smile and think of all the pot holes that diesel tax repaired.

Rob Maitner
Environmental Scientist


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