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No matter which fuel your system uses, the heat it creates is distributed throughout your home in one of three ways: hot water (baseboard), steam (radiators) or warm air (vents). Two are described here. While the system you have may look a bit different, it operates on the same principles as those below.
Your thermostat (1) has a sensor that measures room temperature. When the temperature drops below your thermostat setting (or you raise the level above the room temperature), it sends a signal to the controls (2) on your burner (3) to get into action.
A fuel pump (4) draws oil through a filter (5) to your burner. It turns this oil into a fine spray, mixes it with air and ignites it in the combustion chamber (6), causing the chamber to get very hot.
What happens next depends on the type of system you have: