What Determines Heating Oil Prices?
If you heat your home with heating oil, then you know the price of oil is always changing. You can pay a certain amount during one season and then a completely different amount the following year.
If you’re like many other homeowners, then you might be looking for the best fuel prices in your area. You might wonder why the price of oil continually changes. The truth is answering the question isn’t easy. There are so many factors that affect the price. Throughout the rest of this article, we’ll discuss a few factors that can change what you pay for home heating oil.
The Price Of Crude Oil
According to the US Energy Information Administration, or EIA, one of the main reasons why heating oil changes all the time is due to the changing price of crude oil. During winter of 2006/2007 to the winter of 2017, the price per gallon of oil accounted for over 50 percent of the cost of oil. These changes can impact the price of your oil.
When the price of crude oil is higher, then you’ll spend more during that heating season. The opposite is correct when the price drops. Other factors can cause the price of crude oil to go down and up, such as Organization of Petroleum Exporting Countries, and the amount of oil their output. Currently, political events and supply/demand will play a role in price fluctuations as well.
The price of heating oil can increase when the weather is frigid. In 2013/2014, one of the coldest winters in history occurred. The rate increased by seven cents per gallon. Severe weather including hurricanes, tropical storms, tornadoes and other forms of severe weather can also cause the price of heating oil to skyrocket.
Many storms cause the temperature to drop dramatically, which causes the price to go up. Plus, when the demand for heating oil skyrockets, the cost of oil goes up.
Heating oil suppliers can struggle to get oil to their customers during severe weather. Some suppliers even run out of heating oil. Market prices can go up by a significant amount due to poor weather conditions and supply and demand. According to the EIA, suppliers in the Northeastern region of America buy their oil from Europe or the Gulf Coast when the need for heating oil is very high, and they experience shortages.
Regulatory changes can cause oil refineries to make decisions, which can sometimes lead to a rise in prices. However, these changes can also cause the price to go down. Examples of policy changes include extensive safety requirements. Also, if an oil refinery thinks the demand for oil will decrease, then they may increase the price. This is because production would be scaled down. If this happened during the warm months, then the price would drop because the refinery has an extensive inventory.
Fuel prices can fluctuate based on region and neighborhood. For example, if there are many suppliers in your area, then your heating oil would be cheaper than those who lived in an area where there are only one or two suppliers. If you live near a staging area or a fuel supply area, then your oil will likely cost less. Pricing factors tend to cause oil prices to fluctuate around America.
Alternative Heating Options
Heating oil prices can fluctuate due to the number of alternative heating options and how widely available those options are. For example, alternatives can include natural gas, electricity, and kerosene as well as fireplaces. Each one of these alternative heating sources has their own set of limitations that depend on efficiency, affordability, and safety.
When it comes to what affects the price of home heating oil, there are a few things. These factors include:
- Government policies
- Crude oil prices
- Alternative heating options
- Pricing factor
If you want to find the best price on fuel oil, then contact us today. Here at Miller Oil Company, we provide affordable heating oil throughout Connecticut. Not only are our prices affordable, but our services are high quality. When working with us, you’ll be partnering with a trusted name and a reputable company. Our deliveries are fast and our workers are reliable and friendly. Miller Oil Company offers different delivery plans and various financing options. Be sure to take advantage of our heating services which include furnace tune-ups and heater repairs. To schedule an appointment, then call us today. Someone is standing by to answer any questions that you have.