It can be frustrating trying to predict your costs when home heating oil prices vary from year to year. There are many reasons why they fluctuate, but there are three primary driving factors:
Supply can be influenced by weather in the United States and political events in other countries. If temperatures stay mild, or crude oil prices don’t increase rapidly, retail prices might tend to drop. They can also drop if refiners, wholesalers, dealers, and consumers have plenty of heating oil in storage.
Demand for home heating oil in Connecticut is at its peak during winter months. As demand rises and crude oil prices are stable, home heating oil prices will tend to rise. Demand can vary worldwide based on the economy and weather in addition to other factors.
Local Competition affects the price point of heating oil and the level of price competition in that area. Consumers in rural locations may pay higher prices for heating oil because there are fewer competitors. Prices and service offerings can vary substantially in locations with few suppliers compared to areas with a large number of suppliers.
Large cold-weather systems can impact supply, demand, and prices. People typically use more fuel when these events occur. During extremely cold weather, the amount of heating oil in storage may be used much faster than it can be replenished, and refineries may not be able to keep up with demand.
Geopolitics can also influence oil prices. Since the big oil-producing countries can often be a factor in determining oil prices, tension with one of those nations can make investors nervous that oil may not be readily available. If there is war or conflict in an oil-producing region, crude inventories could seem threatened, and that could ultimately alter the price of oil. Usually this is temporary, and markets adjust within a few days.
Learn more about buying heating oil for your home on a Market Rate or Fixed-Rate plan.