Why Do Heating Oil Prices Change?
As you may have noticed, the price you pay for heating oil can change – sometimes considerably – from one heating season to the next. The question is, why does this happen?
As it turns out, heating oil prices are determined by a complex combination of global, regional, and local forces.
Factors used in determining heating oil prices include:
- The price of crude oil – Most (as much as 70 percent) of the price of heating oil depends on the cost of the crude oil from which it’s made (marketing, refining, and profits account for the rest). As a globally-traded commodity, crude oil is subject to many market forces that are constantly in flux.
- Seasonal weather – More than 90 percent of the U.S. market for heating oil is right here in the Northeast, so the weather we get here has a big influence on heating oil prices. In an especially cold winter, heating prices will go up due to high demand; in a mild winter, heating oil prices may stay level or even go down.
- Local competition – If you live in an area where many heating oil companies compete, like we do here in the Hudson Valley, heating oil prices tends to be lower. Proximity to shipping ports also affects heating oil pricing.
- Political climate – Federal and state policies can encourage or discourage the use of home heating oil; if demand is expected to decline as the result of a new policy, heating oil prices will probably increase as production slows.
- The price of alternative fuels – When the cost to use natural gas, propane, and other fuels rises, many homes switch to heating oil, which raises demand and typically drives up oil prices in the short- or medium-term.
As we said, a complex combination.
With all of these factors in constant motion, the price of heating oil is impossible to predict; anyone who tells you otherwise is not being truthful with you.
But one thing that IS predictable is that the price you pay for heating oil as an Economy Oil customer will always be among the lowest in our Orange, Sullivan, and Ulster County service area. And we back those low prices with expert, friendly service, reliable heating oil deliveries, and convenient services like our prepay and bulk purchase discount programs.
We can’t predict the price of heating oil – but we do guarantee you’ll always get a great price on heating oil deliveries in the Hudson Valley region. Contact us today to become an Economy Oil customer and see for yourself.