Heating Oil Prices
The heating oil prices are a major concern for homeowners because heating oil is the main fuel used to heat homes and offices for heating and air conditioning. Heating oil suppliers around the world apply different factors into their prices, and finding the cheapest heating oil for domestic heating can be a challenge for homeowners. When crude oil is refined, it goes through a process called fractional distillation. Here, at each different temperature, different petroleum products are obtained. Diesel is one of them and the very next product is the heating oil. From 42 barrels of crude oil, we obtain 10 barrels of diesel and 2 barrels of heating oil. The main difference between these two is the amount of sulfur they contain. According to the United States Environmental department, diesel cannot contain more than 500 ppm of sulfur, but heating oil can contain between 2000 and 2500 ppm of sulfur. Since less purification is needed, heating oil prices tend to be somewhat lower than the diesel prices.
Factors Affecting Heating Oil Prices
Different factors affect the price of heating oil. The demand for heating oil is very high, being second only to gasoline among all the products derived from crude oil. In USA alone, 4.6 billion gallons of heating oil was used in 2008. Out of 111 million households, heating oil is used by about 8 million households in the USA. So, the fluctuation in the prices of heating oil is a cause of major concern.
The factors affecting the heating oil rates are:
- The price of the crude oil (kerosene prices) is the most important factor. Obviously, since heating oil is derived from crude oil, when the price of the crude oil rises, so does that of the heating oil. The current year’s price rise can be explained by the following:
- Political disturbance in the major crude oil producing regions in the world have driven up the prices of crude oil and hence that of the heating oil. The disturbances in Libya and in Iraq are some instances.
- Sometimes, natural occurrences like a cyclone inhibit the production of crude oil which in turn affects its prices. The tropical storm Gustav (2008) is an example. With its onset, the oil rig on Gulf of Mexico was evacuated and the price of crude oil rose.
If the cost of refining increases, so will the per gallon prices of heating oil.
You need to transport the heating oil to your home. This is done by tankers. The change in transport costs will get reflected in the cost of the heating oil. So, when the price of the crude oil the price of rises, heating oil rises both due to increased cost of raw material and rising transport costs.
How to Save on Heating Oil Prices?
You cannot control the per gallon prices of heating oil. It depends on a number of interrelated supply and demand factors at the global level. However, you can adopt a few simple steps to save your own money. When the heating oil costs are comparatively lower, you should buy and store it.
- Demand, and therefore price is higher during winter. So, buy and store during the low demand season.
- Adopt energy saving devices and practices.
- Pool your resources with that of your neighbors and buy in bulk. You will save on transport cost and are bound to get a bulk discount so that per unit heating oil prices are lowered.
- You can also check our heat pump reviews and in floor heating pages to find out more about the ways you can save money in your home.