Why Are Heating Oil Prices So Unpredictable?
Last month, the U.S. Energy Information Administration (EIA) provided an updated forecast for home heating oil prices in the coming year. Overall the picture looks good heading into what is predicted to be a mild start to the 2020/21 heating season – but as is true in any year, that picture can change quickly.
Home Heating Oil Pricing Factors
The question is, why is that true? Why are heating oil prices so hard to predict? The answer is because the price of fuel oil is based on a number of factors that are constantly in flux, some of which include:
- the price of crude oil – The price of crude oil typically accounts for anywhere from two-thirds to three-quarters of the cost of domestic fuel oil. The problem is that crude oil is traded in global markets, which means it is subject to a range of constantly changing market forces.
- global events – Anything from national disasters to political unrest can shift the crude oil market – sometimes significantly. August’s EIA’s report covers several factors that are currently influencing global pricing.
- weather – Weather can vary drastically from season to season and year to year in the Northeastern U.S., where about 90 percent of country’s heating oil is consumed. In an especially cold winter, heating prices will go up due to increased demand (and, often, to constrained supply); in a relatively mild winter, heating oil prices may stay level and could even go down.
- 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.
- politics – Policy can influence the use of home heating oil by making it more or less favorable to buy or sell crude oil, heating oil, or alternative fuels (see below).
- 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.
So what’s the best way to save on heating oil delivery in RI and southeastern MA?
While predictions in the most recent EIA report look positive overall, they could change quickly in unpredictable COVID-related conditions, with a pending U.S. presidential election to come. The bottom line is we can’t be certain where national or Rhode Island heating oil prices will go.
But we do know where you should go to buy heating oil in RI and MA: Discount Oil Brokers.
Why? Simple: when Discount delivers your oil, you know you’re getting quality HeatForce™ Home Heating Oil at the best price you’ll find in our Rhode Island and southeast Massachusetts service area, with no added fees or BS. We back that quality heating oil with nearly four decades of expertise in getting it delivered to you when you need it most, in any weather.
To learn more about reliable, low-priced heating oil deliveries in RI and southeastern MA, contact the heating oil experts at Discount Oil Brokers today!