How Are Heating Oil Prices Set?

Posted: Apr 29, 2012
Author: Bumgarner Oil

Customers that buy heating oil to use in their homes or businesses will have noticed that the price fluctuates from one purchase to the next. If you are one of these customers, you may be wondering why it is that the prices change so much. Heating oil is traded on the commodities market and, as such, is subject to price fluctuation in much the same way that share prices on the stock market rise and fall.

Some of the factors affecting heating oil prices are:

• Crude oil prices. Heating oil is refined from crude oil and, as a result, fluctuations in the global price of crude oil will have an effect on the local price of heating oil.
• Seasonal demand changes. Assuming the crude oil price remains stable and does not have a major impact, heating oil prices will tend to rise in the winter months as demand increases and then fall again in the summer months.
• Local competition. If there are several oil companies operating in the same area, the increased competition will often, but not always, result in lower end user prices.
• Suppliers’ operating costs. Costs like transport, wages, rental of premises and vehicle operating costs have to be borne by the local oil company. These costs can vary from region to region and will be reflected in local heating oil prices.

Local oil companies often have plans available to help customers reduce the impact that heating oil price fluctuations have on them. Speak to your oil company and see what options they can offer you.