Making Sense of the Heating Oil Rollercoaster
There are global and local reasons why heating oil prices change.
No one likes uncertainty when it comes to prices. It’s been stressful in the grocery aisle, at the gas pump and on the car dealer’s lot for the last few years with record inflation and product shortages. At Advantage, we can attest that heating oil prices have had their share of ups and downs.
Happily, heating oil prices in Morris and and Sussex Counties — and throughout New Jersey — have come down from their painful heights in October and November 2022. Still, customers often ask us what affects the price of heating oil.
Here are four factors that can cause fuel prices to rise and fall.
1. Global Energy Markets
Heating oil is derived from crude oil. As such, its price tracks global oil rates. In recent years, that has led to some price surges. A recent example came with Russia’s invasion of Ukraine. This caused economic ripples as Europe and the U.S. cut off Russian oil shipments. The result was higher prices on crude products. Similarly, prices rose last year when OPEC decided to slash production.
There’s also the unfortunate role of energy speculators on Wall Street trying to make money off rising prices and exacerbating the problem.
2. Supply and Demand
As with any commodity, the price of heating oil is affected by supply and demand. This takes on global proportions in our interconnected world. For example, when demand drastically dropped during the pandemic, prices collapsed. Then, we fought our way out of the pandemic. Demand rose sharply, and supply didn’t keep up. This forced prices up.
3. Weather Patterns in the Northeast
Did you know that over four-fifths of this country’s heating oil usage happens in the Northeast? That means increased demand in New England—for example, during a cold snap—can cause prices to spike. This is also one of the reasons we encourage customers to fill their heating oil tanks in the summer when warmer weather often drives down prices.
4. Operational and Administrative Costs
Heating oil’s price also reflects the costs associated with getting it to your home, including labor, transportation and storage. Advantage Oil works hard to keep operational costs down so that you can enjoy the lowest possible price for your fuel.
Advantage can help!
As you can see, most variables that cause heating oil prices to fluctuate are beyond the control of a local fuel company like ours. And we do not make more money when heating oil prices go up. (We typically make less as customers cut their usage.) Believe us when we say we hope for lower energy prices, just like you.
That said, Advantage offers C.O.D. pricing backed by a complete service department—an unusual combination in the C.O.D. world. In addition, look over our “Ways to Save” page. It’s the perfect time to make some of those minor home improvements that add up to serious savings.