Heating Oil Trends: 2022

What a year it has been for heating oil. As we round out 2022, heating oil prices are up 3.8% since last week, to an average low price of about $4.10 a gallon in the Northeast.

Looking back at the year, we started 2022 at around $2.86 a gallon. Prices skyrocketed with Russia’s invasion of Ukraine, and reached a high of nearly $6 a gallon in May. If you were on automatic delivery during this time, you likely saw prices well north of $7 a gallon as dealers were facing major cash flow issues and had to make up for it any way they could.

Heating oil prices ranged from $2.86 a gallon to start the year, to a high of nearly $6 a gallon in May. Prices briefly spiked again in October before settling down to the $4 a gallon range by the end of December.

Some Dealers Went Out Of Business

We also saw some smaller oil dealers suddenly go out of business during that time, as they didn’t have enough cash in the bank to refuel their trucks at the terminals when the prices jumped.

Fortunately, prices were at their worst toward the spring time so most of us were able to forego a delivery during this time.

We saw a nice gradual decline through the summer months, to a recovery point of about $4.00 a gallon to start the fall heating season. But suddenly the Northeast was faced with a major supply issue. Dealers were showing up at the terminal only to find out there was no oil to be had.

The problem was there was a huge disconnect between the spot price of oil (what the dealer pays to fill the truck that day), and the futures prices. The prediction was that prices were going to drop precipitously (and they did!). This led to everyone from the ports to the terminals being super hesitant to stock up on oil. If they filled up their storage tanks one day, and the price dropped by a dollar a gallon the next day, they’d suffer major losses. This artificial supply constraint caused spot prices to spike even further, before eventually settling down.

Fortunately, we saw a major recovery in the last 6 weeks of the year, and prices are at a somewhat manageable $4 a gallon right now.
Prices are hovering around the low $4 a gallon range as we round out 2022.

A Volatile Year For Heating Oil

2022 was an unusually volatile year, to say the least. It’s too early to say if we’re in the clear for the rest of heating season, but we’ll continue to monitor prices as we head into 2023, and hopefully have good news to share in the coming months.

In the meantime, if you want to closely monitor your tank levels, we highly recommend the Smart Oil Gauge. Keep track of exactly how much oil you are using at home. And when prices spike, see how long your tank will last before you need to refill. It saved many of us hundreds of dollars this year as we were able to let our tanks get very low knowing exactly how many gallons we had left.

Happy heating,