Oct 09

Why Do Heating Oil Prices Rise And Fall?

heating oil prices in Flagtown new jerseyConsumers who use fuel oil as their primary source of heat are sometimes unaware of why changing prices never seem to stabilize. They wonder why the price they pay one season changes considerably by the next one. There are really no simple answers. There is a variety of factors, however, that affect the price of oil. In this article, we will discuss some of the reasons for fluctuations in oil prices.

Crude Oil Costs

The United States Energy Information Administration states that the price of crude oil has the biggest effect on prices of fuel oil in general. For example, approximately 10 years ago, crude oil costs accounted for over 50 percent of the average price of one gallon of fuel oil. Simply put, the high prices attached to crude oil have a similar effect on the cost of heating oil. It also works the other way around, with the price of heating oil affecting the cost of crude oil. Some determining factors with regard to the price of crude oil include the supply output from the Organization of Petroleum Exporting Countries. This organization is also referred to as “OPEC.” Political events and the demand from other areas of the world for oil are also contributing factors.

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supply and demand fuel oilHeating oil prices usually rise during extremely cold winters. For example, a rise of seven cents per gallon of heating oil occurred during the winter of 2013-2014. This was one of the coldest winter seasons in recent history. Heating oil prices also soar when severe weather events take place. This includes hurricanes and tropical storms. This is because when a tropical storm makes landfall, it typically has an effect on temperature. In almost all cases, its impact causes temperatures to dip. Obviously, this results in higher heating oil costs.

In addition, severe weather also makes it more difficult for suppliers to get products to their clients. It may also lead to lack of oil inventory. Because this directly affects supply and demand, it causes prices to go up. The United States Energy Information Administration also states that heating oil companies in the northeastern United States must frequently purchase oil from the Gulf Coast or Europe if there is a heating oil shortage. Due to logistical challenges, this causes the prices of heating oil to rise.

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Government Policies

Regulatory changes also affect the price of oil. It can either fall or rise depending upon the impact. Stringent safety requirements are one example of a regulation that may affect prices. This is often because refineries scale down production when changes in regulatory requirements occur and as one might suspect. This causes prices to rise. However, if regulatory changes are put into place during warm months, refineries typically end up with an excess of inventory, which causes prices to fall.

Additional Factors

Oil prices vary from one region or neighborhood to the next. For example, heating oil is less expensive in neighborhoods that have many suppliers who are competing with each other. Similarly, a person can expect to pay less for heating fuel if he or she lives in town that is close to a fuel refinery. These are just a few examples of some of the reasons prices fluctuate throughout the country.

Other Heating Options

supplemental heating sourceThe demand and availability for alternative heating options may also have an impact on traditional heating oil prices. These alternate methods of heating a home include

  • fireplaces
  • natural gas
  • geothermal heat pumps
  • kerosene
  • electricity

One must keep in mind, however, that these options are associated with certain limitations, especially with regard to efficiency, affordability, and safety.

Heating Oil Prices Flagtown NJ

Weather, regulatory changes, pricing factors, alternative heating options and the price of crude oil are all factors that affect heating oil prices and fluctuations in fuel costs.

For reliable and trusted heating oil delivery services, contact the professionals at Skylands Energy. We offer different service plans that you can choose to suit your fuel delivery needs. Also, we have other services that will help keep you nice and warm throughout the cold NJ winters. Our services include coal delivery, plumbing services, heater repair, heating system maintenance, and heater installations. Whatever your home comfort needs are, Skylands Energy can take care of you. Be sure to contact us today to speak with one of our specialists.

We service Belle Mead NJ 08502, Flagtown NJ 08821, Hillsborough NJ 08844, Manville NJ 08835, Neshanic Station NJ 08853, Raritan NJ 08869, Readington NJ 08870, Somerville NJ 08876, Three Bridges NJ 08887, Zarephath NJ 08890, and surrounding areas.

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Contact us now at (908) 707-1776 to find out more!

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