Why Did the Price of Heating Oil Go Up?

Date: October 22, 2021

Rising Energy Prices Make It Hard for Everyone

rising oil price south carolinaAs you no doubt know all too well, the price you pay for your heating oil in South Carolina can change from year to year. Why does that happen?

It’s because the market price of oil is always tied to a variety of factors that are constantly changing. As far as the reasons for energy price increases, there are many factors that cause energy prices (crude oil, fuel oil, natural gas, electricity, coal, propane, etc.) to rise and fall. These include:

  • levels of inventory
  • global supply/demand
  • severe weather, like hurricanes
  • the state of the economy
  • geopolitical events that may affect energy production

All of these factors have contributed to the normal trend of ups and downs in the energy markets over the years. While we have experienced fairly stable prices over the last seven years or so, tt goes without saying that we are in an “up” market right now.

COVID-19, Supply and Demand

It’s no surprise that COVID-19 has played a large role in the current state of the market. Demand for oil sunk to deep depths as more countries went into lockdown last year. Global supply became diminished as producers responded by scaling back oil input.

Now, with the wide availability of vaccines in most countries, people are traveling again and businesses have opened up. But global supply hasn’t caught up with all of this increased demand. When you match low supply with high demand, prices go up. Of course, this is true for many other commodities, not just for heating fuel. We’re seeing this right now across the board with increases in the price of many consumer goods because of the tangled global supply chain. This is another complex problem caused by the world-wide pandemic.

The Role of Energy Market Investors

Right now, Wall Street speculators are not “bullish” on investing in the fossil fuel industry. They’re still skittish about how the crude oil market crashed and burned last year at the beginning of the pandemic.

For example, in the Spring of 2020, crude oil prices fell all the way to negative $30 per barrel! That had never happened before, and it meant that for a short period, traders had to pay buyers to take oil! But now, the price for a barrel of crude oil is more than $80 because of high demand matched with lower supply.

Investors are also hesitant because they’re watching legislators try to move toward more renewable energy. Ironically, the heating oil industry is making excellent progress with making their fuel more dependent on renewable energy and transitioning away from a fossil fuel component.

South Carolina Heating Oil Companies Look Out for You

People sometimes misunderstand how negatively higher prices impact local fuel dealers. Heating oil companies don’t make more money when prices rise—they actually make less.

Please reach out your heating oil supplier to find out ways they may be able to help you reduce your energy costs, or handle payments more easily. If you’re struggling to keep up with your payments, they may be able to work out a solution with you.

Focus on Ways to Save

One thing that always pays off no matter whether prices rise or fall is to cut your fuel consumption. There are many ways you can minimize your winter heating bills and maximize your comfort.

  • Remember that efficiency beats switching fuels. The Consumer Energy Council of America says switching fuels is a “costly and long-term gamble”; you can lose thousands in conversion and installation costs. To reduce your fuel bills, the best solution is to invest in efficiency.
  • Make sure your boiler or furnace is operating at peak efficiency by having a professional heating tune-up. It can help you save 5–10% on your annual fuel bills.
  • Evaluate your home’s insulation. You can save a lot by properly insulating ceilings, and by sealing, caulking and weather-stripping your windows and doors.
  • To take away any worries about the normal ebb and flow of oil prices, many companies offer programs designed to save you money and keep your heating bills manageable—no matter what happens with world oil prices.

Rest assured, your South Carolina heating oil supplier will do everything possible to ensure they can make deliveries—no matter the cost or difficulty they face.

Let’s all get through this winter warm and safe together and hope for better days—and lower prices—next spring.