If you’ve been shopping around for heating oil, you’ll know that oil prices are really high now! At the time of writing, prices are ranging between $4.89 – $5.31 per gallon in Danbury, CT. This is a massive increase over the past couple of weeks. But some states like Vermont and Massachusetts have seen price increases of up to 10% since just last week! But why exactly is this? Well, I’ll be covering those reasons here!
War with Iran
If you’ve been paying attention to the news, you’ll know that the United States is currently at war with Iran. This has caused crude oil prices to soar! This is due to the war disrupting oil supply chains out of the Strait of Hormuz. The oil supply disruptions are also increasing concerns of long lasting outages. These outages will most likley increase the price of crude oil even more.
Approximately 20% of the world’s oil flows through the Strait of Hormuz. Iran has effectively closed off the strait, making it harder for oil to get through to the rest of the world. This not only causes global oil prices to increase, but domestic prices as well. When global prices seem to change, domestic prices will shortly follow.
Increased Price per Barrel
At the time of writing, the price per barrel of crude oil is currently sitting at $111.54. This is due to the current volatility of the market and prices are subject to increase per barrel. Most crude oil barrels will tend to hold around 44 gallons of oil. Which averages out to about $2.53 per gallon. However, companies still need to make a profit, and how they calculate that is up to them. Prices have increased by roughly 11%-13%, which has affected global oil prices.
Gasoline Prices
Heating Oil Prices aren’t the only prices that are going up due to this. You might’ve noticed prices for Gasoline have increased astronomically as well! Currently in Danbury, prices per gallon are $4.29 per gallon of gasoline! Where I live, prices range from $3.89-$4.09 per gallon. Both Gasoline and Heating Oil come from crude oil. Fears of an oil shortage have caused prices to skyrocket for everything that derives from crude oil. This will only cause oil prices to gradually increase.
How Much Longer?
The president made an announcement this week that the war with Iran will go on for at least another couple of weeks. This is still putting strain on the oil market and making it more and more volatile.
As prices for heating oil and gasoline continue to increase, all we can do is wait for the war to end and the strait to open up once more. This will gradually decrease the price of oil again and we’ll be back to our normal pricings.
Happy Heating!
Hunter
