Heating oil is one of many petroleum products relied upon by residents in the U.S. to heat their homes. On a historical perspective, the price of heating oil has fluctuated. It means instability has and will always be something to consider for new homeowners. But with the year to year fluctuations, it's no secret that during the summer season, the price goes down quite significantly, while prices become higher during the winter, obviously because the demand is substantially higher. For this year's winter though, there is some concern about high prices again because of recent issues with oil developing countries. But will they really affect the heating oil prices in the U.S.? Let's find out…
In the process of comparing home heating oil prices, consumers should understand that there are certain factors to consider. The list includes the cost of crude oil, cost to produce heating oil out of crude oil, the cost to market and then distribute, the projected profits and losses of refiners, and of course the interests of dealers and wholesalers. Say for instance, statistics in 2001 revealed that distribution as well as marketing costs combined for forty six percent of the cost of one gallon of heating oil. Crude oil meanwhile comprised about 42 percent of the cost of each gallon of heating oil. The last twelve percent meanwhile went to the refinery processing costs.
As a consumer of heating oil or someone who is considering the installation of an oil-fired heating system at home, you have to realize that heating oil prices paid by consumers will vary from time to time and the same may be affected by the area or part of the country where you live. So prices will therefore change because of different reasons.
One of those reasons is the seasonality in the demand for heating oil. Say for instance, when crude oil prices are stable, heating oil prices have the tendency to incrementally rise in the winter months because of the higher demand. But then again, there will be times when the prices rise so fast and at very high levels.
Another possible reason for fluctuating home heating oil prices is the level of competition in the local market. The competitive differences may prove to be crucial between localities with only a few suppliers compared to that of an area where there are numerous big-time competitors. Therefore, those who live in secluded and remote areas may eventually have to face higher prices since suppliers aren't threatened with competition.
After surviving the high energy costs of the last winter, it's nice to hear that majority of American consumers this year will be treated with lesser heating costs this winter. While those homes that rely on natural gas can expect a decline of about five percent, those who depend on home heating oil are expected to save more, thanks to the projected stability of heating oil prices coming up.
Those homes that depend on heating oil, or more particularly those living in the northeast, are expected to spend fifteen percent less this coming winter. Now isn't it good news? This is mainly because there has been a significant (and steady) drop recently in oil prices around the world. It is something everyone can be happy about since in the past decades, heating oil has been bombarded with negative impressions and feedback. Proponents of other heating alternatives are even beginning to gain some advantage in convincing first-time homeowners of using the so-called "more practical" heating systems that use electricity, natural gas, or propane.
In determining the trends in home heating oil prices, you should take into consideration the fact that affects the same. Demand may well be the very most important factor in determining the trends. For instance, heating oil delivery companies and distributors will attest to the fact that they are going to lower their prices in quiet times or those times when demand is nowhere near the level of that during the winter. However, demand can also be downplayed. One instance is when during a cold month like December, the stock market price of oil was suddenly reduced and eventually the price of heating oil also plunged, giving good news to those who are using it to heat their homes.