Why Do Heating Oil Prices Change So Frequently?
If you’ve been getting heating oil deliveries for a while, you know that the price of the fuel can vary – sometimes quite a bit – from year-to-year (and even from season to season). The question is why does that happen?
The truth is, heating oil prices depend on a number of factors that are constantly changing – some global, some local.
Some factors of heating oil price changes
- The price of crude oil – The price of crude oil accounts for nearly 70 percent of 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 market forces that make its price volatile.
- Weather – About nine out of every ten gallons of heating oil sold in the U.S. is sold here in the Northeast, where winter temps (as we’ve seen the last two years) can see as many ups and downs. 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.
- Competitors – If you live in an area where there are many heating oil suppliers competing for your business (like New York State, for example), heating oil prices will tend to be lower. Distance to shipping ports also affects heating oil pricing.
- Laws and policies – 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.
- The price of heating oil alternatives – 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.
Each of these factors will swing from year to year or even month to month, making the price of heating oil impossible to predict.
One thing you CAN predict, however, is that the price you pay at Penguin Oil will always be as affordable as you’ll find for heating oil delivery in Sullivan, Orange and Ulster Counties. But don’t take our word for it – find out for yourself when you become a Penguin Customer.
Please note: At Penguin 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 and your heating oil deliveries (and propane deliveries) coming throughout this challenging time.