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Heating oil, like gasoline and diesel fuel, is a “finished” product derived from crude oil, so its price is closely tied to the price of crude oil. U.S. production of crude oil has been soaring in recent years, and that has contributed to much lower prices.
And while it’s true that external factors (like global politics, the weather, supply disruptions, etc.) can impact energy prices, the good news is that the fundamentals of the heating oil market right now are stable, and expected to stay that way for a number of years.
That’s because there is a strong sense from numerous energy market experts (like the Energy Information Administration and other financial experts) that we have reached a “new normal” in the economics of energy prices. The U.S. is producing more oil than at almost any time in its history. And global demand for energy has fallen as some large, energy-consuming countries have seen their economies contract or experience slow growth. When supply rises and demand falls, prices fall with it. This led to the 13-year low in heating oil prices in 2016 and is the reason that experts expect low prices to stick around.
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.