» What Factors Affect The Price Of Heating Oil?
What Factors Affect The Price Of Heating Oil?
If you get your heating oil deliveries on a ”Will Call” basis (rather than pre-paying for your gallons at the start of the season, for example), you have probably noticed that heating oil prices can change from season to season and year to year – and sometimes even from month to month. The question is, why does that happen?
Well, mainly it happens because a lot of variables come together to determine the price of heating oil. The most important of these include:
- Global market forces – More than two-thirds of the cost of home heating oil can be attributed to the price of crude oil – a commodity traded on global markets and subject to a number of complex and always-changing pricing factors.
- Changeable northeastern weather – About 90 percent of the heating oil Americans use is consumed in the Northeast, where weather can change rapidly and significantly. In a warmer than average fall/winter, heating oil prices might drop; in a colder than average heating season, prices will rise.
- Regional competition – The number of heating oil companies operating in an area will affect the price of the fuel; if you live in an area with many heating oil supplier options (as we do here in CT), heating oil prices tend to be lower.
- Policy / government changes – Energy policies can be designed to encourage or minimize the use home heating oil; if heating oil production is expected to decline as the result of a new policy, heating oil prices will probably rise as supply diminishes – especially if weather creates a higher demand for fuel.
- Alternative costs – If the cost of propane and other heating oil alternatives rises, many homes rely more heavily on heating oil; this increase in demand typically drives up oil prices in the short- or medium-term.
As you can see, a lot of unknowns enter the heating oil pricing equation – which makes it easy to understand why heating oil prices can be so unpredictable.
While there is no foolproof way to predict where heating oil prices might go in New England, there is one thing you can hang your winter hat on: when you become a Hocon heating oil customer, the price you pay for your heating oil will always be at least 25¢ lower than the state average* – guaranteed.
It’s one way Hocon works hard to make winter easier for our local customers. Contact us today to learn more.
*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.