Latest Update About Fuel Prices
On October 5, OPEC announced it was slashing production by two million barrels a day. Within just three days, our suppliers increased the cost of heating oil by 70 cents per gallon. That’s right, 70 cents per gallon.
This is not just impacting heating oil. Expect natural gas, electricity, gasoline and propane to move higher too. Of course, this is not simply about supply and demand. We’ve learned that when prices move this far this fast, you can always see the impact of Wall Street firms that jump to take advantage of the momentum to make a quick buck. (Or should we say millions of bucks?) It frustrates the heck out of us.
Of course, things can turn around just as quickly. We saw prices spike in spring only to drop by over a dollar in summer. There are just too many variables to know where things will go from here.
Here are a few things to bear in mind:
- We hate high prices and volatility just as much as you do. It hurts our customers, hurts our company, and makes planning very difficult.
- This year, supply issues could become problematic. While we have excellent relationships with our suppliers, it is imperative that you go on (or stay on) automatic delivery. This way, if we go on “allocation” from suppliers, have drivers out sick because of COVID or face severe weather, we can manage capacity better and keep you warm.
- Don’t be surprised by big bills. If you’d like to know how much you used last year so you can project this year’s bills more accurately, call us. This is going to be painful, but it will be helpful to be able to plan for it.
- If you are having trouble keeping up with your payments, it is critical that you call us as soon as you realize there’s an issue. We can work with you but only if you communicate with us early.
I will try to keep you informed as events unfold. There are many things we can’t control, but we will always prioritize our existing customers over new ones. We will go the extra mile to keep you safe and warm. And we will be there when you need us.
Keeping You in the Loop about Fuel Prices
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.
Recently, 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.
Propane Customers Are Still Vulnerable Too
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, the weather, transportation bottlenecks, energy policy, and other issues.
Good News and Bad News about Heating Oil
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 the higher-priced products. 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 Can Help Lower Your Winter Fuels Bills
We encourage people to get on our Simple Pay program, which we can begin immediately for both heating oil and propane customers. If you enroll now—at no cost—we can spread your fuel payments over as many as 13 months. 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.
Shocking spike in fuel prices is hurting all of us
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. They are also concerned that there will be interruptions in supply that will cause them to run out of fuel.
Prices were already up more than a dollar this season from the previous year because of issues related to the pandemic. Then, the Russian invasion of Ukraine shocked the energy markets, sending crude oil up over $120 per barrel.
To give you a sense of this of how this affects us and you, on March 2, we received notice at night from our suppliers that their prices were going up 20 cents the next day. Then, on March 3, they went up three more times- a total of 60 cents in just 24 hours. Propane prices are higher as well, although not quite as dramatically.
What’s coming next
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 10 days. 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 over 118 years and have very strong relationships with suppliers and financial institutions. We are already getting calls from customers who are with other companies who can’t say the same, and who are unable to get deliveries when needed. You don’t have to worry about that with us.
If you have having trouble paying your bill talk to us. Many times, we can work out something to give you more time, especially if you’ve been with us a while. Remember that we do offer price protection options and will be coming out with those sometime later this spring.
Nothing will make us happier than when prices start dropping. Until then trust us to look out for you and pray for the people of Ukraine.