One of the nice things about heating oil is that you can order it whenever you need! You are not at the mercy of your dealer and can order whenever! This also includes if you’re on an automatic delivery contract! If your next scheduled delivery isn’t for a while, then you can always order oil using FuelSnap or schedule a time with another local dealer to come out and deliver. But Heating Oil prices tend to change often. There are a few different reasons why they change, but I’ll be going over the major ones!
What Causes Price Fluctuations?
When deciding when to order heating oil, it’s important understand how the price fluctuations work! Prices can fluctuate for a variety of different reasons. But, the most common reasons usually consist of the following:
- Crude Oil Supply and Demand
- Supply and Demand of Local Dealers/Competitive Pricing
- Call-by or Automatic Delivery
Crude Oil Supply & Demand
The biggest factor for pricing changes is based on supply and demand. While you might not think it would, crude oil prices have a big effect on the prices for heating oil. Heating Oil is apart of a group of oil known as crude oil. Aside from heating oil, crude oil tends to include jet fuel, gasoline, machinery lubricants and much more. These all are affected by changes in crude oil prices. It’s a base fuel and is used in the above mentioned fuel types.
When global prices change for crude oil, it affects all types of it. Weather the price decreases or increases, Heating Oil prices will change. This includes major global events. COVID-19 is the biggest example if this. This brought demand for crude down by a lot during lockdown. Nobody was flying or commuting to work which caused a massive oversupply of crude oil. This caused the pricings to drop significantly, which brought heating oil prices to an all-time low! During this time, some dealers had prices below a dollar per gallon!
Now the exact opposite happened in early 2022 when Russia invaded Ukraine. This caused a massive increase in Heating Oil prices because we stopped buying Russian oil, which resulted in higher prices for gasoline and heating oil. Since then, prices have been slowly returning to normal. Back when this first happened, prices for gasoline averaged around $4-$4.50 per gallon in the northeast! Now the average price per gallon is around $3. While for heating oil, prices where around $5 per gallon!
Competitive Pricing for Heating Oil
This is another major factor in how heating oil prices shift. Long island is a prime example of how competitive pricing can effect heating oil costs per gallon. There are hundreds of heating oil dealers located in long island which will give you a lot of different options to chose from when it comes to getting heating oil. This makes some of the cheapest heating oil prices in the northeast located in long island.
But, in areas with a lower population density, there tends to be much less choice when it comes to heating oil dealers. For example, the further north you go in New York, the less Heating Oil dealers there are available, and more propane dealers become available. This makes oil pricing in these less populated areas more expensive because there are fewer dealers available to give others competition. This will tend to give more expensive pricings for these areas. Dealers will often have control over the market in these areas so they can make the price per gallon whatever they’d like it to be.
Call-By or Automatic Delivery
Regardless of which you choose, the price will eventually change. However, whether or not you order by Automatic Delivery or when you need it will determine what price you’ll end up paying. But what price you are willing to pay is dependent on the prices that they offer you.
Automatic Delivery is a pretty popular way to order oil. You pay a certain amount every month, and the dealers will come out once a month to deliver you a certain amount of oil based on how much you’re burning. What they charge you and how much they’ll deliver depends on how much oil you burn a month and how much you can fit in your tank. Usually you can negotiate with the dealer if they offer you a price that you don’t like. However, some dealers will not negotiate. Automatic delivery tends to be more convenient but ultimately it’s more expensive.
Call-by delivery is another popular form of ordering oil. This is what we use on our FuelSnap website. This form of placing an order is only for when you need it. If you decide to go with this, then be aware that you’re going to have to pay more attention to your oil level and usage. But if you have a Smart Oil Gauge, then you won’t have to worry about running out! The device will keep track of what your level is and when you need oil! Additionally, ordering through Call-By only will let you choose from local dealers in your area and give you a larger pricing range to choose from! Call-by tends to be cheaper, but also requires you to stay on top of your usage and oil level.
Conclusion
There are many factors as to why heating oil prices change so much. But the above-mentioned reasons are the most common. Supply and demand are the most common, and as global events occur, this can affect the price fluctuation in oil. Similar to that, the population density of your area could affect the pricing. If more dealers come to your hometown, then that could positively affect your oil prices by making them lower.
Deciding weather or not you should order through automatic delivery or call-by will also determine how much oil per gallon is. While automatic delivery is more convenient it is more expensive. So if you’re willing to pay the extra money for peace of mind, then absolutely do it!
Finally, Call-by only is cheaper but does require being a bit more on-top of your usage and tank level. But, if you have a Smart Oil gauge then you won’t have to worry about running out! It keeps track of your heating oil level and usage, so that you know when to order! You’ll also be alerted when you need a fill and it has “FuelSnap” integration so that you can order directly from the app!
Happy Heating,
Hunter
