Written on: October 14, 2022
Updated 10/14/22
This year, volatile energy prices have been an unpleasant fact of life. After heating oil prices spiked in the spring, we saw them decrease throughout the summer. These price fluctuations were driven by global factors, including market speculation, supply issues and the conflict in Ukraine.
On October 5, OPEC reduced its oil production by two million barrels a day, and this has caused prices to skyrocket yet again. In just the last few days, the price we pay for heating oil has increased by more than a dollar per gallon.
We want to say right away that this situation frustrates us as much as it does you. We hate the disruption to our business and especially to you, our customer. We hope prices go down again soon, like they did over the summer. But with prices changing so quickly, no one can definitively say where they’re are headed in the weeks or months ahead.
With history as our guide, we can say two things with confidence. Firstly, this price spike will not be limited to heating oil — all energy sources with be affected, from natural gas to grid electricity. Secondly, what goes up must come down. It’s just a matter of when.
We’ll keep tracking heating oil prices daily (sometimes hourly) and keep you in the loop. In the meantime, there are some steps you can take.
Enroll in our no-fee automatic delivery if you haven’t already. We have great relationships with our fuel suppliers. Still, there’s reason to believe that oil supplies will become a problem in the coming months. Having customers on automatic delivery helps us effectively manage our supply and ensure everyone stays comfortable and safe. And remember, we always prioritize our current customers.
Additionally, we can help you plan for higher prices by providing a breakdown of your prior heating oil usage that you can use to budget for the winter. Please let us know if we can help.
Finally, please call us if you’re worried about paying. We can almost always work out a solution with you. But the sooner we can address your concerns the better. Please don’t wait to contact our team.
We have been in this business a long time, and we’ve weathered many tough periods. Rest assured that we’re doing everything we can to help you navigate the winter with a little less stress. We are always here when you need us.
Updated 5/19/22
We know many of you are looking at the energy cost increases and wondering when this will end, and we don’t blame you. Our goal is to keep you in the loop as much as possible, even though the situation remains very fluid.
Last week, our suppliers again raised prices by over 65 cents per gallon over a few days. The reasons are complicated and seem to be affecting heating oil and diesel fuel much more than gasoline.
The driving factor is that both heating oil and diesel fuel–pretty much the same thing–are in abnormally short supply now. In fact, if you look at prices on the commodities exchanges, they show heating oil at a dollar less than we can get it at! That never happens. It’s called “basis blowout” and reflects a disconnect between the markets and actual supplies.
Our propane customers have been feeling the pain too, although price swings have not been as erratic as what we’re seeing right now with heating oil and diesel. Since propane is a by-product of both crude oil and natural gas, rising prices for these two fuels have a ripple effect on propane and drive its price upward.
Inflation has raised its ugly head too, as the actual cost of delivering fuel has risen. Long-time factors that have always influenced where propane prices go include supply-and-demand balance, transportation bottlenecks, energy policy and other issues.
The good news is that the supply issues are happening because the markets expect heating oil to go lower by a fair amount over the next several months. Fuel suppliers are reluctant to purchase fuel now and get stuck with higher-priced product. The bad news is that it is causing prices to be artificially higher now, and no one really knows for sure what will happen with the Ukraine war. The war is also causing a historic amount of diesel fuel to be shipped to Europe, which is impacting heating oil as well. By the way, we are seeing the same kind of surges in natural gas and electric costs.
We decided to hold off most deliveries except for those who seemed to be running low. It didn’t help that we’ve had an unusually cold spring, and people needed to use their heat longer than normal.
Beyond that, we want to urge people to get on our Budget Plan program, which allows us to spread your fuel payments over 10 months, beginning in September. If prices do stay high next year, it will be much easier to manage your bills if you don’t have to pay for all of your deliveries in just five months of fall and winter.
There is no way of knowing whether prices will rise or fall going forward. However, we will do our best to keep you in the loop as things emerge.
If you have any questions, don’t hesitate to call our office. We are here for you.
Updated 3/11/22
Unsurprisingly, we’ve been getting many calls around two connected issues: the surge in fuel prices and supply concerns. People are astounded by how much prices have risen and how fast. So are we. They are also concerned that there will be interruptions in supply that will cause them to run out of fuel.
The Russian invasion of Ukraine shocked energy markets, sending crude oil to record territory and spiking all energy prices. We’ve had increases from our heating oil suppliers of over $1.25 per gallon in less than a week. Propane prices have been better but still increased over 40 cents per gallon. And the situation remains very fluid.
We don’t know where things will go from here. One thing we can tell you is that we hate this as much as you do. Some people are under the misconception that when prices rise, we make more money. The opposite is true. People cut back usage. They have trouble paying their bills, and our receivables skyrocket. Meanwhile, we must pay our suppliers in just ten days. We must borrow much more from the bank. It is an awful mess for everyone.
One thing you can count on is that we will not let you run out. We have been in business for many years and have very strong relationships with suppliers and financial institutions. We are already getting calls from customers who are with other companies that can’t say the same. These customers are unable to get deliveries for 20 days out. You don’t have to worry about that with us.
If you are having trouble paying your bill, talk to us before it becomes a problem. Many times, we can work out something to give you more time, especially if you’ve been with us a while. We can also set you up on a monthly payment plan.
Nothing will make us happier than when prices start dropping. Until then, trust us to look out for you, and let’s pray for the people of Ukraine.
