Anyone who uses fuel oil to heat their home is well aware of the fact that heating oil prices are constantly changing. This leads consumers to question why this is so. What you pay one winter can significantly change by the subsequent one. This question isn’t exactly simple to answer. There are many factors that affect cost. In this article, we will cover some of the factors that are responsible for heating oil price fluctuations.
Price Of Crude Oil
According to data from the US Energy Information Administration (EIA), the cost of crude oil is the biggest component of the price of fuel oil. For instance, crude oil accounted for about 55% of the average price of a gallon of oil from the winter of 2006/7 through the winter of 2016/17. Because of this, changes in crude oil prices will affect heating oil prices. In other words, high crude oil prices will translate to high heating oil prices and vice versa. With that in mind, some of the factors that determine the price of crude oil include the output and supply from the Organization of Petroleum Exporting Countries (OPEC). Also, another factor includes demand from major industrial countries as well as political events.
Extremely cold weather in winter tends to drive up heating oil prices. For instance, heating oil prices rose about seven cents per gallon during the 2013/14 winter season. This was one of the coldest winters in recent history. Similarly, severe weather events such as tropical storms and hurricanes also cause the prices of heating oil to soar. For starters, when a tropical storm makes landfall, it usually brings lower temperatures. This causes the demand for heating oil to rise.
Also, severe weather events make it harder for heating oil suppliers to deliver the product to their customers. What’s more, it may also cause some suppliers to run out of oil inventories. This causes the price of the product to soar due to market forces of supply and demand. In fact, the EIA says that heating oil suppliers in the Northeast US will often have to buy oil from the Europe or the Gulf Coast if the region experiences a heating oil shortage. Obviously, heating oil from these sources would cost more because of logistical challenges.
The price of oil can either rise or fall depending on how heating oil refiners react to regulatory changes. This includes the introduction of stringent safety requirements. For instance, if refiners expect the demand of fuel oil to decline due to such changes, the price is likely to increase. This is because refineries scale down production. On the other hand, if the changes occur during the warmer months, prices are likely to fall as refineries would have huge inventories.
Heating oil pricing factors generally vary from one neighborhood/region to another. For instance, neighborhoods with many suppliers, pay less for heating oil. This is true when compared to someone who lives in a neighborhood with few suppliers. Similarly, you’ll likely pay less for heating oil if you live close to a fuel staging and supply area. Overall, the price of heating oil tends to fluctuate across the country based on pricing factors.
Alternative Heating Options
The availability and demand for alternative heating options may cause the price of heating oil to fluctuate. This includes fireplaces, electricity, kerosene, geothermal heat pumps, and natural gas. Of course, these alternative heating options have limitations, especially in terms of safety, affordability, and efficiency.
Heating Oil Prices Trenton NJ
The factors responsible for heating oil price fluctuations include alternative heating options, pricing factors, regulatory changes, weather and crude oil prices.
Contact Princeton Heating & Air Conditioning for all of your heating needs. This includes HVAC services and fuel oil delivery. All of our HVAC contractors are NATE certified which means that you can trust them to have the knowledge and training to get the job done correctly. You can always trust your heating oil deliveries to be fast, affordable, and safe. PFO offers many different home comfort services. For a list of our service options, click here.
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