Where are Heating Oil and Propane Prices Headed This Winter?
Many customers have locked in their heating oil or propane price for this winter. Others are still waiting to see where prices are headed and hope that prices will fall in the next month or so. What are the factors causing prices to move and where are heating oil and propane prices headed?
Over time, heating oil and propane prices tend to follow crude oil prices. As those who follow the news know, crude oil prices have moved up and down a great deal in the past several years. Crude oil fell dramatically in 2008 because of the financial crisis and a worldwide recession that led to lower oil demand (lower demand = lower prices). In 2010, as economies started to recover oil prices went up (more demand = higher prices). Other factors such as speculation, growth in developing countries such as India and China, and concerns over supply from the Middle East can lead to price changes.
Oil prices have come down from over $110 in 2010 because the World economies are not growing as expected. Will prices continue to fall or are they headed back up this Winter? The US Energy Information Administration (EIA) expects the price of oil to stay close to current price levels through the winter. However, if projections for the major economies of the World get worse, oil prices are likely to fall. If there are signs of an economic recovery such as more jobs or more economic growth, then oil prices will increase.
|What Will Make Prices Go Up or Down?|
|Higher Prices||Lower Prices|
|• Higher than expected world economic growth|
• A weaker US dollar
• Unrest in the Middle East
• Decreased OPEC production
|• Lower than expected world economic growth
• A stronger US dollar
• A stable Middle East
• Increased OPEC production
If it’s really important for your peace of mind to predict your budget for winter fuel bills, then you should consider one of our Price Protection Plans for our New England customers or our Cap Pricing Program for our Atlantic Canada customers, that way you’ll be able to budget for the upcoming heating season. If you would prefer to pay a market price or are absolutely convinced that heating oil or propane prices will fall from here, then you can choose variable pricing.
Posted on September 15, 2011