The factors that affect the price of your home heating oil
In May 2020, heating oil prices fell to their lowest levels in three years. For anyone new to heating their homes using oil instead of gas and electricity, it was a great introduction to the good side of price fluctuations. It was also the start of an important lesson, as the price is unlikely to remain that low forever. It’s important to understand the factors that could affect the prices you pay and take a few steps to make sure you aren’t caught out this winter.
A rather crude explanation
To get straight to the root causes of fluctuating heating oil prices, we need to go no further than the price of crude oil. As one of the most important natural resources in the world and a cornerstone of modern economic development, the price of oil can be wildly unpredictable. Political factors, such as OPEC agreements, foreign exchange rates, and conflicts play a large part. So does supply and demand and other economic factors.
The global effects of Covid-19 related lockdowns and travel restrictions have sent global demand for oil falling to a 20-year low, explaining the drop in home heating oil prices. To get an idea of just how jumpy crude oil prices can be, take a look at this graph.
Although it plays a huge role in the price you pay, crude oil is not the only factor at play. There are a few more reasons for home heating oil price changes.
One thing for certain with the great British winter is that it’s always unpredictable. We may have a long, dry cold snap like the ‘beast from the east’ in 2018,or a record-breaking warm February like we saw only a year later in 2019. The kind of weather we get early next year will have a big impact on home heating oil prices for the rest of 2021.
If we get a warm, mild winter and people don’t need to use as much oil, less demand will push prices down. If, however, we get a sustained period of really cold weather, more people will be looking to order their next delivery and this increased demand will likely lead to higher prices.
The amount you are buying
To put it simply, buying in bulk can make your next purchase cheaper. This is because it reduces delivery costs due to the fact that delivery drivers have to make fewer trips to you. With home heating oil, though, there is an important point to remember. Your tank should only be filled up to around 90% of its capacity to avoid spillages.