Why Do Heating Oil Prices Change? Here Are Some Causes.
Posted: April 13, 2020
One question customers ask us every year is “why do heating oil prices change so much?” It’s an understandable question, considering that those prices can change quite a bit from season to season – and even within the same season.
The seesaw pricing of heating oil is the result of the constantly-changing factors that come into play to determine the market price for heating oil.
Several reasons for fuel price changes 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 (marketing, refining, and profits account for the rest). 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.
- Seasonal weather – Did you know that more than 90 percent of the heating oil used in U.S. homes is consumed right here in the Northeast, where winters (as we’ve seen the last two years) can see as many ups and downs as global commodity markets? In an especially cold winter like we had in 2018/19, heating prices will go up due to increased demand (and, in some cases, constrained supply); in a relatively mild winter like 2019/20, heating oil prices may stay level and could even go down.
- Local competition – If you live in an area where there are many heating oil suppliers competing for your business (like Rhode Island, for example), heating oil prices will tend to be lower. Proximity to shipping ports also affects heating oil pricing.
- Political climate – Policies and political agendas can influence the use of home heating oil by making it more or less favorable to buy or sell 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.
As you can see, each of these factors will vary – sometimes considerably – from year to year, making the price of heating oil 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 a Vaughn Oil customer will always be fair and honest – and we back that promise with expert, friendly heating oil equipment service, reliable heating oil deliveries, and convenient services like Smart Pay and Fuel Prebuy to lighten the load during heating season.
We can’t predict the price of heating oil – but we do guarantee you’ll always get a fair price on every single gallon you buy from us. Contact us today to become a Vaughn Oil customer and see for yourself.
Please note: At Vaughn Oil, your safety and comfort are always our priority. Please see our Covid-19 Service Update Page to learn more about how we are working to keep your family and our crews safe, your home heating systems working, and your heating oil deliveries coming throughout this challenging time.