Understanding How The Price Of Oil Moves.
While we cannot control world energy prices, we can help you make sense of how things work, so you can make the best decisions for your family. If you have any questions at all, don't hesitate to call us! We are here for you.
Why aren't oil prices regulated?
They used to be, but this led to inflated prices and artificial shortages. Now, while prices can fluctuate sharply under a free market, they have generally stayed much lower and supplies have not been a problem.
How are oil prices set?
Heating fuels like oil, natural gas, propane and electricity are traded on the commodities market which goes up and down like the stock market. By far, the biggest influence on the cost of heating oil is the price of its raw material, crude oil.
What can cause rapid price changes?
The market responds immediately to any situation that might affect supply or demand, including unexpectedly cold or warm weather, supply interruptions or excess production. These changes are immediately reflected in the wholesale price we pay for the oil we deliver to you.
Do heating oil retailers make more profit during sudden price changes?
No. When world oil prices rise, it doesn't mean we get a bigger share of it. It's similar to when orange juice prices go up because of an early frost. The local grocery doesn't make the extra money.
So who does make the money?
Anyone (including major oil companies, refiners, speculators and others) who was either smart or lucky enough to have secured oil before the prices started to rise. However, these same people would have lost money had prices dropped.
How can companies in the same area charge very different prices?
Heating oil is a very competitive business. At any time, you may find people who are priced either higher or lower than our price. The difference depends upon:
- the quality of the fuel and certainty of supply.
- the quality of service provided.
- payment terms, delivery options and equipment repair service offered.