People who heat their homes with oil always wonder where heating fuel prices may be headed, especially when another winter is on the horizon. There are many factors that cause heating oil—and other fuel prices—to rise and fall.
These include unforeseen events like severe weather and global politics that affect energy production: Destructive hurricanes can temporarily shut down major refineries; an international crisis (or the pending threat of a conflict) can have an effect on oil production.
Although events like these may not actually lead to any shortages, fuel prices around the country—including those of gasoline, diesel fuel and heating oil—can all rise based on speculation in the stock market about what could happen in the coming weeks and months. This is often referred to as the fear factor. Speculators from giant banks, hedge funds and other entities “bet” on which way the commodities market will move, hoping to make money from their investments.
On a local level, seasonal demand, operational costs and even competition between dealers can result in price fluctuation.
Thanks to big increases in domestic supply, coupled with a reduction in global demand and a strong U.S. dollar, oil prices are expected to stay stable for the foreseeable future. The U.S. Energy Information Administration has described this as a “new normal” in heating oil prices.
To take away any worries about the normal ebb and flow of oil prices, your Maine heating oil dealer may offer programs designed to save you money and keep your heating bills manageable—no matter what happens with world oil prices.