Ever Wonder Why The Price Of Heating Oil Fluctuates?

by: Nat Brown

Home heating oils are almost a must for all homes. Heating oil is what we use to heat our homes during the freezing winter season. The price of heating oil fluctuates and we are already used to it. But do you know why the price does fluctuate?

Why is heating oil very important? Heating oil is used both for residential and commercial. A large percentage of homes and commercial establishments use heating oil. The demand for heating oil is very large that is why even if the price is high, people still buy it. What some people do is buy heating oil well in advance for the winter season. For instance, some of them fill up their oil storage tanks while the price of the heating oil is still low. Good for those with large storage tanks. But those with regular size storage tanks, they have to deal with the fluctuating heating oil price!

Heating Oil Sources And Price Fluctuation

There are two basic sources of heating oils: domestic or imports. Domestic means coming from local refineries while imports mean coming from other foreign countries. When domestic refineries aren’t able to supply the demands for oil in the areas, they will get imports from foreign refineries.

It should be noted that heating oils are actually part of the distillate fuel oil group. This means that when domestic refineries produce heating oil, they are also producing other petroleum products. This affects the cost of the heating oil during winter season. The demand for heating oil is very high but the demand for other petroleum products is not. So when the refinery produce heating oil during winter season, they have to add up the cost lost in the other petroleum products, thus, making the price of the heating oil a little higher.

The seasonal demand for heating oil is another factor in the fluctuating price. When the demand is very high, oil companies can make their price high knowing that customers will still buy. Also you should consider the cost of the crude oil as it vastly affects the price of the heating oil. Crude oil is a major factor in heating oil. When the price of the crude oil goes up so does the price of the heating oil.

So don’t be surprised to see the price of the heating oil change from time to time. The change in price is inevitable. It is not just something that oil companies want to do. It is actually triggered by some factors like crude oil, heating oil source and demand among many others.