Where Are Heating Oil and Propane Prices Headed This Heating Season?
Heating fuel bills will likely be higher than last year, according to a recent EIA report (US Energy Information Administration, October 12). Compared to last winter, the EIA is forecasting 10% higher heating oil prices and 9% higher propane prices for the Northeast. They are also forecasting a slightly warmer than average winter, which would help lower heating bills.
The EIA is a reputable agency and provides valuable forecasts. However consumers should note that no expert or agency can predict heating oil and propane prices with 100% accuracy, there are simply too many factors that affect prices. Some of these factors include: crude oil prices, regional weather, regional supply, and speculation.
Because crude oil is the primary element in heating oil, the price of crude oil will ultimately drive heating oil prices. Over the long term, propane prices also tend to follow crude oil prices.
Factors That Could Affect Short Term Crude Oil Prices
These events will likely lead to lower crude oil prices:
- Lower predictions for the global economic growth and recovery
- European debt crisis gets worse
- Libyan oil supply comes back online more quickly than expected
The events will likely lead to higher crude oil prices:
- Global economies improve more quickly than expected
- Syrian oil supply is disrupted due to current turmoil or economic sanctions
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. With these options, 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 our variable pricing option.
Posted on October 25, 2011