Why Do Heating Oil Prices Change So Often?
As you may have noticed over the years, the price you pay for heating oil can change quite a bit from season to season – sometimes even from month to month. The question is, why does that happen?
When it comes to heating oil prices, the reality is that there are a number of factors that come into play that are always in motion.
Some key influences on heating oil pricing in a given month or season:
- The price of crude oil – The market price of crude oil can account for as much as three quarters of the overall cost of heating oil, making it the most important heating oil pricing factor. The problem here is that crude oil is an internationally traded commodity, which makes it subject to global market forces that are constantly changing.
- Weather – Speaking of forces that are constantly changing, weather is a second factor that influences heating oil prices. About nine of every ten gallons of heating oil used domestically is consumed right here in the Northeast, and you know how up and down our weather can be. In especially cold winters, tight supply and high demand drive prices up; milder weather typically brings more moderate price swings.
- Geography – If you’re lucky enough to live in an area where there are many heating oil companies (as most of us do here in New England), competition will play a role in the price of your heating oil. Proximity to shipping ports is also a factor.
- Global, federal, and state policies – Energy and environmental policies can encourage or inhibit the use of home heating oil. If oil demand drops as a result of changing laws, heating oil prices will probably increase as refineries cut production.
- The cost of alternative fuels – When the cost of to use heating fuel alternatives rises, many homes switch to heating oil as an economic alternative; this increase in demand will usually drive up oil prices in the short- or medium-term.
As you can see, there are many variables at play when it comes to setting heating oil prices, which is why it’s so important to plan ahead to keep your heating bills manageable. For example, our Easy Pay Plan – which runs from September through July – lets you spread out your heating oil payments over the course of the year without incurring a finance charge. That can really make heating oil bills more manageable around the holidays, or whenever you’re using more fuel.
While we can’t predict the price of heating oil, we can guarantee you’ll get fair pricing on every gallon you buy from us – every day, year after year. Contact us today to become a W.H. Riley & Son customer and see for yourself.
Please note: at W.H. Riley & Son, 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 and your heating oil deliveries coming through this challenging time.