What Affects Heating Oil Prices?
The price of heating oil, just like any other source of heating, normally fluctuates from time to time. It is something that you shouldn’t really worry about since the increase or decrease in the current prices of heating oil does not extend to a certain point that consumers will be alarmed with. If you have been led to believe that oil is never the practical choice for heating because of the instability in prices, you should know that there’s no truth to it.
For you to understand and value the importance of oil in heating your home, it is imperative that you know what affects the price, and this article is all about that.
So, the price of heating oil fluctuates due to the following reasons:
1 - The demand for heating oil is seasonal, which is why even if crude oil prices, to which oil for heating is derived from, are stable, there still is a possibility that home heating oil prices will suddenly increase; and this kind of development is expected in the winter months when the demand for this commodity increases. Simply put, fuel oil delivery companies will increase their price because more people are competing for what they’re selling.
2 - Another thing that affects heating oil pricing is the cost of crude oil. If you don’t know it yet, there is no heating oil if there’s no supply of crude oil. And because crude oil is reliant on the worldwide supply, it’s really difficult to maintain stability in terms of pricing. This is very true with regards to thee demand for crude oil in the U.S. because majority of the crude oil suppliers in the world are members of the Organization of the Petroleum Exporting Countries or OPEC and the U.S. isn’t a part of it.
For you to understand and value the importance of oil in heating your home, it is imperative that you know what affects the price, and this article is all about that.
So, the price of heating oil fluctuates due to the following reasons:
1 - The demand for heating oil is seasonal, which is why even if crude oil prices, to which oil for heating is derived from, are stable, there still is a possibility that home heating oil prices will suddenly increase; and this kind of development is expected in the winter months when the demand for this commodity increases. Simply put, fuel oil delivery companies will increase their price because more people are competing for what they’re selling.
2 - Another thing that affects heating oil pricing is the cost of crude oil. If you don’t know it yet, there is no heating oil if there’s no supply of crude oil. And because crude oil is reliant on the worldwide supply, it’s really difficult to maintain stability in terms of pricing. This is very true with regards to thee demand for crude oil in the U.S. because majority of the crude oil suppliers in the world are members of the Organization of the Petroleum Exporting Countries or OPEC and the U.S. isn’t a part of it.
3 - Meanwhile, there’s likewise a good chance for oil prices to fluctuate when there are changes in the level of competition in the local markets. In other words, the number of heating oil delivery companies and suppliers in a specific place, be it a city, state, or region, will definitely affect the price of the commodity. The more companies compete for the same number of homeowners who use oil, the lower the prices are expected to be. Fewer competitors meanwhile always favor heating oil suppliers because consumers don’t really have a choice but to buy from them.
4 - Next, operating costs in the regional or local level can likewise lead to price fluctuations in heating oil. For instance, there might be several households in an area which are remotely located. This means that the cost of delivering oil to them could be higher than usual. And for companies to offset the cost of doing business this way, they simply will increase the price of heating oil delivery.
As a consumer of heating oil, you have to accept the fact that prices can increase in dramatic fashion, but this is something that’s also happening with all other heating sources, especially once the winter season approaches. The best way to protect yourself from the price fluctuation is to buy oil early or explore price protection plans instead.