Heating Oil Prices and Crude Oil. How are They Linked?
Since earlier this year heating oil prices have been on the rise, and many consumers may be wondering why. All heating oil consumers should be aware that the price of heating oil is tied to the price of a barrel of crude oil. Heating oil is made from crude oil therefore as the price of crude oil goes up, then heating oil prices will also go up.
The graph below shows the relationship between crude and heating oil prices in the U.S. Northeast
Crude prices are primarily driven by global supply and demand. Consumers often hear about the economies of China and India and how they are rapidly growing – therefore their demand for crude oil is also increasing. If the global supply does not keep up, then crude prices will go up and with them heating oil prices. Other factors also affect crude oil prices such as the strength of the U.S. dollar and speculation. When you are listening to the evening news and hear about an increase in the price of crude prices, it’s safe to assume that heating oil prices and your costs to heat your home will also be increasing.
Prediction for Heating Oil Prices
So where is heating oil pricing headed? The truth of it is, experts can only offer up an opinion on how the many moving parts will result in the cost to heat our homes. If anyone actually could predict the price of crude or heating oil they would likely be enjoying early retirement in a tropical location that doesn’t require central heat.
Steps You Can Take to Save on Heating Oil
There is little we can do to control world energy prices but there are steps you can take to reduce your energy consumption and help you save money. Irving Energy is committed to helping you save money. Please visit our recent blog “How to Maximize your Energy Savings this Winter” or visit our energy savings tips.
Posted on January 5, 2011