Anyone that uses fuel oil for the purposes of heating their home understands that oil prices change constantly. For example, the heating oil prices Allenhurst NJ will be different from one season to the next and can even vary within one heating season. Basically, what homeowners pay today will likely be different than what was paid for fuel last winter. Many fuel oil consumers question why this is so.
Top Reasons Heating Oil Prices Fluctuate
Below, we discuss some of the factors that influence what you pay for your heating oil.
Crude Oil Price
Data released by the US Energy Information Administration (EIA) shows that the costs of crude oil are the largest factor in the price of fuel oil. For instance, during the period from 2006 to 2017, the price of crude oil accounted for somewhere around 55% of the average costs for a gallon of fuel oil. Due to this, any changes in the price of crude oil will also affect that of heating oil. To put it another way, high prices for crude oil translates into high prices for heating oil.
The converse is true as well. There are also factors that help determine the costs of crude oil which include supply and output from OPEC. Other variables that affect the price of fuel oil are political events and the demand-driven by industrialized countries.
Heating Oil Pricing Factors
Pricing factors for heating oil often vary from one region or neighborhood to the next. That is because areas with lots of fuel oil companies pay less for their heating oil compared to those with fewer suppliers. Accordingly, customers living near fuel staging and supply areas are likely to pay lower prices for heating oil.
Weather is another aspect that drives up the costs of heating oil. This is true for particularly extreme cold weather. An example of this comes from the 2013/14 winter season that was among the most severe winters of recent history. Consumers saw the price for heating oil rise seven cents per gallon. Other severe weather conditions related to events such as hurricanes and tropical storms can cause prices for heating oil to increase dramatically. These events typically cause temperatures to drop which contributes to higher demand and increased heating oil prices.
Severe weather events contribute to price increases of heating oil in other ways too. Severe weather events make it harder for suppliers to make deliveries to customers. Oil suppliers can run out of stored inventories of oil and that, in turn, drives the forces of supply and demand. According to the EIA, heating oil suppliers in the U.S. Northeast typically purchase oil from the Gulf Coast or Europe when heating oil shortages occur. The logistical challenges of this obviously cause costs to increase.
Oil prices can also rise or fall according to the reaction of oil refineries when regulatory changes take place. An example of this is when stringent safety requirements are introduced. For example, when refiners anticipate a decline in the demand for fuel oil, they might increase the price as production is scaled down. Also, since oil refineries do not want to have large inventories on hand at the end of the season, they may reduce prices during warmer months.
Options For Alternative Heating
Another factor affecting heating oil prices is the demand and availability of alternative heating options. These factors include electricity, kerosene, fireplaces, natural gas, and geothermal heat pumps. Still, there are some limitations to these alternative options for heating the home. These limitations include affordability, efficiency, and safety. The bottom line is that heating oil prices are going to fluctuate from one region of the country to another and from one year to the next.
Fluctuations in heating oil prices are affected by:
- crude oil prices
- regulatory changes
- pricing factors
- alternative options for heating the home
In order to ensure that you are getting your dollar’s worth, make sure that you find a reliable fuel oil delivery company that provides high-quality deliveries at cost-effective prices. Likewise, be sure to schedule regular heating system maintenance each year and replace your old boiler or furnace when it is underperforming.
Call Lawes Company For Fast & Reliable Oil Deliveries
Lawes Company offers trusted and affordable heating oil deliveries. We are known for our honest prices and skilled services. Not only that, but we also offer heater maintenance services which also impacts how much fuel your system requires to keep your home warm.
A tune-up greatly enhances the energy efficiency of your unit. This means that if it is operating at peak performance, then it uses less fuel. This, in turn, reduces your fuel costs throughout the winter. Be sure to call Lawes Company to schedule a delivery or set a heater tune-up appointment.
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