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 Guide to Heating Oil Prices
- $ How are oil prices set?
- Heating oil is a commodity, and as such, is traded on the commodities market with products such
as wheat, pork, gold, and lumber. Since heating oil is a derivative of crude oil, the cost of crude oil has the greatest
effect on the cost of heating oil.
- $ What causes large price fluctuations?
- The price of any commodity will be affected by changes in supply and demand. Supply and demand
of heating oil are directly affected by unexpectedly cold or warm weather, oil shortages, and excess oil production.
- $ Why aren't oil prices regulated?
- Oil prices were regulated at one time, but this caused inflated prices and artificial shortages.
Since de-regulation, prices have generally stayed lower, and oil supplies have not been a problem.
- $ Do local dealers make more profits when prices suddenly increase?
- No. A price increase does not mean more profits for local dealers. It's similar to an increase
in orange juice prices due to an early frost--local grocery stores do not profit from such a hike in prices.
- $ Who does make money when oil prices rise?
- Those companies who were fortunate enough to have purchased oil prior to a price increase stand
to profit from a rise in heating oil prices. They can offer heating oil at a higher price than their purchase price and
still remain competitive in the marketplace. However, these same companies can lose money should prices drop.
- $ Do local dealers wait to deliver until prices are highest?
- Sometimes it may seem this way, especially if you've just gotten a costly oil delivery! However,
local dealers really have no way to predict how oil prices will fluctuate from week to week. They rely on customer needs
and the most efficient truck routes when scheduling heating oil deliveries.
- $ Why is it that companies in the same area can charge very different prices?
- There are several reasons for dramatic differences in heating oil prices among local competitors.
Price often depends on: 1) The quality of the fuel provided; 2) The quality of service provided; 3) The payment terms,
delivery options, and equipment service offered.
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