Analyst: Buy Now, Avoid Unpredictable Heating Oil Prices Later
It might be worth it to fill up your oil tank before the end of summer, as prices will be unpredictable as the weather gets colder.
The huge spikes in gas prices have also driven up the cost of home heating oil to record levels. The average price of #2 fuel oil in New Hampshire is $4.72 per gallon as of Thursday, according to the state Department of Energy.
Oil analyst Tom Kloza, founder of the Oil Price Information Service, told Seacoast Current that in his 47 years of watching prices, he's never seen an extended period of time where natural gas, electricity, and coal were above the price of oil.
"And they're dramatically above the price of oil in Europe, so that Europe and South America and some other countries are really sucking up the extra diesel and heating oil," Kloza said, adding that it's only going to get worse when the boycotts of Russian oil start in early December.
Factors in Determining Price
That's one of the wildcards that could impact prices. Another is unusually cold weather.
"They could be apocalyptically high if we get cold temperatures and (Russian President Vladimir) Putin decides 'hey I'm not waiting for a boycott on December 5 to cut off crude oil supplies,'" Kloza said.
One solution from New England's U.S. Senators led by Maggie Hassan (D-NH) is for President Joe Biden to release stockpiles from the Northeast Home Heating Oil Reserve.
"With lower inventories of crude oil, propane, and natural gas and the continued global disruption caused by the Russian invasion of Ukraine contributing to a sharp rise in residential energy costs, we urge the administration to closely monitor the energy needs of the Northeast and release stock from the Northeast Home Heating Oil Reserve," reads the letter.
Will it succeed in lowering prices?
"When you're talking oil demand for crude at about 100 million barrels a day, and you're talking about releasing a million barrels in the northeast, it helps, but it's not a big deal. It's like putting a Band Aid on an injured artery," Kloza said.
Kloza said that the best thing for homeowners to do is fill the tank before possible hikes.
"If I were a home heating oil customer, I would load up today," Kloza said. "Hold your nose and fill up. As distasteful as it might seem, and most of these tanks are 500 gallon tanks, it's a pretty big knot, but I think it might be prudent to do that. Diesel prices and heating oil prices could go parabolic depending on weather."