Why Are Oil Prices so High This Season?

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As the Northeast faces freezing chills this season, homeowners are not only turning up the heat in their homes. However, many have noticed their energy bills are looking particularly higher than usual. However, due to supply chain issues and various geopolitical shifts, stock in various energy sources have fallen dramatically this year, leading to higher prices that have continued to fluctuate throughout the season. 

More than a third of New Englanders use heating oil, but no family wants to make the difficult decision of paying a pricey energy bill or going without heat this winter. Speaking with your local heating oil supplier about pricing and budget plans can be great ways to alleviate some of the burden the volatility has brought on. Your provider wants to assure you that while prices fluctuate, they will eventually even out. So fear not, and we’ll walk you through exactly why oil prices have been so high, and why they have continued to fluctuate this season. 

 Supply Chain Issues 

One of the main reasons for heating oil prices dramatically fluctuating this season is due to supply chain issues from Covid-19, alongside the various energy crises from the Russia-Ukraine conflict. According to lead petroleum analyst Patrick De Haan at GasBuddy, the conflict has resulted in heating oil, natural gas, and distillate fuels being stuck in Russia. Since global demand continues to climb, prices have fluctuated in an upward trend. 

Also, the U.S. is seeing a shockingly low inventory of diesel and home heating oil. While increasing production at oil refineries could help relieve high prices, Professor Patrick Penfield at Syracuse University says it’s not that easy. Penfield remarks, “It is very costly to increase capacity at refineries. They’re probably looking at a 10-to-12-year payback”.

High Demand & Extremely Cold Temperatures

With 2022 including one of the most cold and aggressive winters Connecticut has seen in recent years, many people are choosing to stay home rather than risk canceled flights or dangerous road travel. Therefore, home heating oil use and its prices are peaking as homeowners are turning up the thermostat. This demand is causing pricing to increase, but as the weather slowly thaws, analysts are forecasting oil prices to stabilize.

Local Competition

Your geographic location also has a major impact on your heating bills. Luckily in Southwestern CT, many homes rely on heating oil, which allows multiple providers to compete on pricing and services. However, if you live in a more rural location with limited service providers, you’ll likely find yourself paying more than you would in a highly populated area. To see if Levco offers services in your town, check out our service area.

What Should I Do?

It can be stressful trying to budget your costs for your energy bill when there’s many factors out of your control. However, there are options that can help. Levco offers a budget plan that can help relieve some of your financial stress, and help you more easily predict your payments and service needs. While there are many factors that affect oil prices, rest assured that it is normal for them to fluctuate, and they are more than likely to stabilize. If you have questions about the services we provide, head towards our FAQ,  or give us a call to speak with one of our knowledgeable account managers at (203) 533-8249.

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