Reports reveal that there are about 8 million people in the US relying solely on fuel oil to heat their homes during the winter season, and most of them are residents of the Northeast region. Heating oil is just another light variant of the natural crude; its supply and prices being heavily influenced by all factors that govern the crude oil markets, and also several other aspects related to logistics and refinery operations. Petroleum or crude oil distillation usually yields six distillates of varying thickness or viscosity; each product put to different use. Grade 2 distillate or fuel oil is commonly used for heating homes using furnaces or boilers.
Heating oil prices in PA were at $3.50 to $3.80 per gallon, constantly expected to touch $5 a gallon. However, given the fluctuating prices, nothing can be said for sure. This winter almost all heater fuels have become more expensive, does not matter whether they run on electricity, propane, natural gas or heating oil — all of them dictated by the price of the barrel of oil.
Prices of oil depend on several factors that influence the production and supply of crude oil, oil refining, and distribution of fuel oil to individual households. Let us take a look at few such factors that cause changes in the prices of heating oil.
Demand and Supply
Home heating oil prices Stroudsburg PA and other cities in the Northeast totally depend on the demand, availability of stock at the refineries, and the efficiency of the supply chain of the various companies that supply fuel oils to homes in the region.
People tend to stock up fuel oils in advance to meet home heating needs for the winter- the more severe the weather conditions forecast, more the demand and higher the prices.
Availability as well transportation problems are few other factors that hike oil prices in winter. Fuel oils, very similar to diesel, are crude oil distillates produced in oil refineries. Local refineries should have sufficient stock of heating oil for the seasonal needs with adequate tankers or trucks to supply oil to the retailers, who then deliver the fuel oil to individual households. Any problems at the refineries or along this supply chain tend to affect home heating oil prices Stroudsburg PA.
Recent reports indicate that closure of a few refineries on the East Coast as well as tight oil distillate stocks in the region are bound to boost the fuel oil prices across the country. New York has recently been asked to adopt greener fuels, increasing the demand for ultra low-sulphur oil here. Interestingly, states on the East and Gulf coast account for more than 60 % of the distillate (both fuel oil and diesel) supply to the Northeast.
Natural or Manmade Disasters
Ships transporting crude oil occasionally capsize during the long voyages, spilling valuable oil into the seas. Similarly, floods and hurricanes often threaten the normal functions and even refinery installations, sending oil prices skyrocketing in the process. Hurricanes Rita and Katrina between themselves hit over 100 oil and gas drilling platforms, and damaged over 400 pipelines. Katrina itself had reportedly affected 19% of oil production in the US.
Oil and gas fields across the world, especially in oil-rich countries in the Gulf, when affected by political disturbances tend to affect the prices of crude, indirectly making fuel oils more expensive. Oil prices in the US, on the other hand, are also hit by its export policies that result more oil being exported outside the nation, making the resource expensive for the locals. Costs tend to further escalate depending on cooler winter climes, calamities, and infrastructural issues. A recent US law has made it mandatory for homes and businesses in select cities to use ultra-low sulfur oil to reduce pollution. The higher demand for green fuel oil, low home heating oil reserves in the NE, relatively lesser oil imports into the NE states with 33 million barrels in the last year have all contributed to changes in home heating oil prices Stroudsburg PA.
Per-gallon prices of oil change at least 4 times a day, making it quite difficult for prices to stabilize at the end user level. However, the oil barrel prices along with other factors considered above have a combined influence on oil prices in Stroudsburg or any other place in the country or across the globe.
Oil is a valuable commodity being actively traded in the markets. Traders most often are company representatives looking to buy or sell oil for fixed rates in future. This way, they try to protect themselves from other factors that may cause oil prices to change in real time. Fixing future contracts usually help them to financially plan for the purchase at a later date. There are other traders who deal in oil futures as a part of their regular investment portfolio to profit from changes in oil prices. Commodity traders indulge in speculation, influencing oil prices.
Saving Up On Heating Oil Costs
Home heating oil prices Stroudsburg PA have been quite stable for a while now, but it is always better to adopt precautionary measures to cut down on oil costs in the winter.
Heat oil furnaces need periodical maintenance to get going once winter sets in. Regular maintenance, cleaning and filter replacements help improve fuel efficiency of the unit. Poor maintenance often results in fuel wastage, with the unit consuming more fuel to keep the home interiors warm.
Another cause for concern is home insulation. Small cracks and breaks in the wall, especially around doors and windows, let out the heat generated within the home, making the furnaces work overtime, meaning more fuel. Once home interiors are well-insulated, spruced-up furnaces can make the space comfortable without any extra oil for the job.
Below is a video on how gas prices fluctuate which also are the same reasons for oil price fluctuations.