underground oil tank

Oil Tanks: What You Need to Know

September 3, 2019 | Real Estate | By: The Goodhart Group

Oil Tanks: What You Need to Know

If you find yourself buying or selling a house with oil heat and an underground oil tank, read on.

Homes that currently utilize (or previously used) oil heat will have some sort of oil tank. Oil tanks store the oil fuel for such furnaces. The three main types of oil tanks are:

  • Above ground. While these tanks are unsightly and vulnerable to external conditions, maintenance is easy. Additionally, if a leak occurs it can be seen and quickly fixed,
  • Underground. The location protects them against vandalism, the surrounding soils keep them well insulated, their overall cost is greater from having to dig a hole for the tank. The U.S. Environmental Protection Agency considers a tank underground if its piping and 10 or more percent of its total volume are located underground.
  • Indoor tanks. These tanks are easy to access and also protected from the elements and weather.

The Pros and Cons of Oil Heat


  • Oil is not explosive.
  • It creates more BTU than gas.
  • It has a lower risk of carbon monoxide poisoning than a gas system.


  • Tanks have to be cleaned and regularly maintained to ensure optimum operation.
  • They are not as efficient as gas furnaces.
  • Oil prices are volatile.

Operational Costs

You can generally expect to use about three gallons of heating oil per day (100 gallons per month) in the winter months. This amount usually equals the total amount that is required to heat your home for the rest of the year. This means that if you have a 275-gallon storage tank, you’ll likely need to refill your tank at least once during the winter. The cost to refill the oil tank ranges from $900-$1,200. Tanks are refilled by an oil delivery service.

Oil furnaces have a higher BTU so they heat the home more evenly, but their counterpart, gas furnaces, are about 10% more efficient along with an overall cheaper price of fuel.

Underground Oil Tanks

Let’s look more closely at underground oil tanks, which are the most problematic for homeowners.

Underground oil tanks built before the mid-1980s were made of bare steel, which can corrode over time. When the tank’s structure weakens, oil can leak out into the surrounding soil and groundwater, making the property an environmental hazard. If such a leak happens, you can expect to pay tens of thousands of dollars to remove the tank and return the soil to a healthy and safe state. Underground oil tanks could also corrode and collapse, creating a sinkhole in the yard.

Selling a House with an Underground Oil Tank

If you have an unused underground oil tank and are trying to sell your house, we recommend removing it before listing your home.

Underground removal costs around $2,500 while a basement removal costs around $1,000. Make sure that you have all required permits before removing an oil tank.

Other options beyond complete removal are filling the tank with foam or a concrete mixture or draining rinsing and capping the tank.

Buying a Home with an Underground Oil Tank

underground oil tank

If you are buying a home with an underground oil tank, we always recommend testing that includes corrosion testing of the tank and screening of the surrounding soil. These tests will tell you the following if the tank is leaking in any way and its state of corrosion. Even if the tank isn’t currently leaking, it may be in a weakened state, making it susceptible to future leaks.

The Bottom Line

Oil heat is a safe, economical way to heat your home. However, underground oil tanks pose an environmental hazard and should be removed. If you’re buying or selling a home with an underground oil tank, speak with your Realtor about testing and removal. If you’re seeking legal advice, this is a reminder that real estate agents can’t give legal advice and we recommend you talk to a real estate lawyer in your area.

Are you looking to buy or sell a home? Reach out today and let our 25+ years of experience help you love where you live.

Contact Us

  • This field is for validation purposes and should be left unchanged.

Newsletter Signup

  • This field is for validation purposes and should be left unchanged.