EIA Updates Its Heating Oil Price Forecast
Earlier this month, the U.S. Energy Information Administration (EIA) provided an update on its forecast for home heating oil prices for the coming year. If you haven’t had a look, we recommend spending a few minutes with it.
Overall the heating oil picture looks positive heading into what is predicted to be a relatively mild start to the 2020/21 heating season – but as is true in any year, that picture can change quickly. Here’s why.
The problem with predicting heating oil prices
Why are heating oil prices so variable? Mostly because they are the result of the constantly-changing factors, some of which include:
- The price of crude oil – This factor has the greatest impact on heating oil prices, accounting for as much as two-thirds of the cost of the fuel. The problem is that crude oil is traded in global markets, which means it is subject to many market forces that make its price so volatile.
- Global events – Anything from national disasters to political unrest can shift the crude oil market – sometimes significantly. August’s EIA’s report covers several factors that are currently influencing global pricing, including recent damage to the infrastructure of Saudi Arabia, one of the nation’s leading global crude oil and fuel producers. Ongoing economic decay in Venezuela, another top producer of fossil fuels, also continues to influence global fuel prices.
- Weather – About 90 percent of the heating oil used in U.S. homes is consumed in the Northeast, where winter weather can vary drastically from season to season. In an especially cold winter, heating prices will go up due to increased demand (and, often, to constrained supply); in a relatively mild winter, heating oil prices may stay level and could even go down.La Niña conditions could bring us warmer than average temperatures for Fall 2020, say some experts.
- Competition – If you live in an area where there are many heating oil suppliers competing for your business (like in Connecticut, for example), heating oil prices will tend to be lower.
- Shifting political agendas – Policy can influence the use of home heating oil by making it more or less favorable to buy or sell crude or heating oil or its alternatives.
- Alternative fuel pricing – When the cost to use alternative fuels rises, many homes switch to heating oil, raising demand for the latter; this increase in demand typically drives up oil prices in the short- or medium-term.
So what’s the best way to save on heating oil delivery in CT?
While predictions in the most recent EIA report look positive overall, they could change quickly in unpredictable COVID-related conditions, with a pending U.S. presidential election to come. The bottom line is we can’t be certain where national or Connecticut heating oil prices will go.
But we do know where you should go to buy heating oil in CT: Hocon.
Why? Simple: we guarantee our price will be at least 25 cents less than the state average.* In fact, we are often much lower than the state’s average*!
When Hocon delivers your oil, you get the full range of conveniences and protections—including automatic delivery, service & maintenance, monthly payment options, Auto Pay, and equipment installations. But you get them at a Guaranteed Fair Price that will help you save big on heating oil delivery in CT.
To learn more, contact the heating oil experts at Hocon today!
*State average price is reported weekly by the US Energy Information Administration; oil prices are subject to change on a daily basis. EIA only reports weekly prices from October through March.