You might notice that what you paid for home heating oil last winter differs from what you paid for this cold season. Heating oil prices change continuously. Although homeowners know that this happens, they might not understand the reason behind it. Common questions that they might ask include: Why exactly causes oil prices to go up every winter? Why are oil prices higher in some places than others?
Unfortunately, the answers aren’t as simple as it sounds. Much similar to the gas prices you pay for your car, there are many variables that affect heating oil prices. Some of these factors have more of an effect than others will. This article will delve into the many reasons heating oil prices fluctuate.
What Determines Heating Oil Prices?
Below, we discuss some of the primary factors that affect what you pay for your heating oil throughout the season.
The Price Of Crude Oil
According to the US Energy Information Administration, crude oil is the primary influence on the cost of heating oil. This is because crude oil is the basis for all refined petroleum products. An extreme example of this was evidenced especially during the 2006 to 2007 winter when crude oil accounted for about 55 percent of the average price of oil per gallon. Therefore, when crude oil costs a lot, it also means that heating oil prices will inevitably increase. The same also holds true when crude oil prices are low.
The global demand and supply fluctuations for crude oil determine the price of crude oil. This is handled by the Organization of Petroleum Exporting Countries or OPEC. Many countries around the world supply crude oil. However, only select political events and major industrial countries dictate its demand.
The regulations put in place by various governments also affect the rise and fall of heating oil prices. These regulations include strong safety requirements. For example, refiners predict that there will be a decline in fuel shortage, so they produce less heating oil. The price of heating oil rises as a result. The same also happens during the summer months when there are large inventories of heating oil in refineries.
Cold & Severe Weather
The cold weather triggers an increase in oil prices. For instance, a clear example of this is one of the most frigid winters in recent history between 2013 and 2014. It also saw the cost of heating increase by around 7 cents per gallon.
Other weather events, such as hurricanes and tropical storms, also push for a rise in heating oil prices. The increase is due to the cooler temperatures these weather events bring with them once they hit land. The demand for heating oil rises, and so does the price.
Bad weather can also make it harder for heating oil companies to deliver heating oil to their customers’ homes. There are also some instances when the suppliers also run out of heating oil due to the severe weather. The high demand and low supply result in higher heating oil prices. The EIA states that heating oil companies from the Northeast US frequently purchase oil from Europe or the Gulf Coast when there is a heating oil shortage. However, the logistical challenges of doing so pose an increase in heating oil prices.
Local Market Oil Price Variations
It is also no secret that heating oil price differs from one region to the other. Heating oil usually costs less when there are many oil suppliers situated in an area. On the other hand, fewer suppliers mean heating oil costs more. This is because there are fewer competitors and consumers are likely to pay more. As a result, homeowners who live in more rural areas are likely to spend more when buying heating oil than those living in urban places.
Different Regional Operating Costs
Living near a fuel staging and supply area means that heating oil will cost less. However, if you live in a remote location, then you are likely to pay more. This is because the delivery fee will affect heating oil prices. The cost of operating a business significantly varies depending on where you live, after all. How heating oil is priced in different regions affects its price fluctuations all over the country. It is also one of the many reasons why heating oil costs vary from one season to the next.
Heating Option Alternatives
The law of supply and demand has a significant effect on heating oil price fluctuations. As a result, many consumers look for alternative heating options, including natural gas, electricity, and fireplaces. It is recommended that you look into these heating sources carefully as each one poses different limits, especially regarding their safety, cost-effectiveness, and energy efficiency.
Several factors cause heating oil prices to fluctuate, including regulations, weather, and other heat sources. The important thing is to understand your household’s needs and budget so you do not run out of heating oil, especially when you need it the most. If you want to know more about heating oil or you are looking for ways to keep your boiler or furnace in tip-top shape, do not hesitate to contact your local trusted HVAC technician today.
Contact Tevis Energy For Your Home Heating Oil Needs
Tevis Energy is a trustworthy HVAC company and heating oil delivery company that services central Maryland and southern Pennsylvania. Our company offers affordable and the most competitive heating oil prices in the area. Our goal is to provide you with excellent products and services. When you choose us to be your oil supplier, you can rest easy knowing that you will have correct and prompt heating oil deliveries at the best possible prices. Furthermore, we offer various heating oil delivery plans and financing options, as a way to customize your oil deliveries. Be sure to call us today to learn more.
Tevis Energy has certified and highly trained HVAC technicians to cater to all your heating and cooling needs. We guarantee that each of our techs has the experience, skills, and knowledge to provide excellent HVAC services. Our team can assist you with installations, repairs, maintenance, and much more. Our superior HVAC solutions always come at affordable costs.
Call us today to learn more about the products and services our company offers. We provide free, in-home estimates.