What Causes Heating Oil Prices to Change?
If there’s one thing we can all agree on it’s that heating oil prices are hard to predict. That’s because there are many factors beyond our control that affect the price of oil! As a New Jersey homeowner it might help for you to know what these factors are so you can better time your heating oil purchases at a time when the price is right based on what’s happening in the world!
What are some of the major factors that impact oil prices?
Supply & Demand
As with any commodity, the laws of supply and demand cause oil prices to change. If there is more oil than there is a demand for it – also known as a surplus – the cost of oil will decrease. More demand and a shorter supply of oil will lead to a price increase.
The weather can play a large role in oil prices. For example, in 2005 Hurricane Katrina struck the southern U.S. affecting 19% of the U.S. oil supply, causing the prices of oil to rise. There was also the flooding of the Mississippi River in 2011, which caused an oil price increase as well.
Political instability in regions that account for the majority of the worldwide oil supply can cause prices to jump. In July 2008 the price of a barrel of oil reached $136 due to unrest and consumer fear about war in the Middle East.
While oil in some regions is relatively cheap to extract, in other areas it can be more costly. Once the supply of cheaper oil is exhausted, the price could rise as the only remaining oil is more expensive.
No matter what’s going on in the world, you can count on Tomasso Bros. Energy to have the lowest prices possible for home heating oil! Take advantage of our automatic heating oil delivery service, or protect your heating oil prices from fluctuating by signing up for one of our payment options. Contact us today to learn more!