Heating oil prices: How low will they go?
December 18, 2014
Oil prices have been continuously dropping, 18.6% from last year. This is hugely different from the estimate that the Energy Information Administration predicted for this winter of 15%. Not only that, but the current cost of oil is $68 per barrel (nearly $40 less per barrel as a few months ago) and could go as low as $50.
Why so low?
The current state of oil has a lot to do with this. The reason for the dropping of the price of oil is due to rising supply and increasing price competition. In the U.S., we have increased our production in North Dakota, taking pressure of OPEC. OPEC has also decided at the end of November that they will NOT be making production cuts which would have increased prices if they decided to make those cuts.
Pennsylvania’s Oil Costs
On average, Pennsylvania’s average heating oil price this December is $2.999 versus last year at $3.683. Just with in the last month the price on November 4 was between $2.99 – $3.349 to December 4 was $2.339 – $2.399.
What does this mean?
There has been a tremendous pressure lifted from both heating oil customers and the heating oil companies. Last winter, many of these companies carried debt for months in order to give their customers affordable monthly payment plans.
The Energy Information Administration has predicted that between Oct. 1 2014 and March 31, 2015 there would be a price drop for home heating oil of 15%, 27% for propane, 5% for natural gas, and 2% for electric. On the other hand, if the winter happens to be 10% colder than predicted, oil prices will only drop 5%, propane would decrease 15%, natural gas would increase 6%, and electric would increase 2%. Although this is all good news, the cost of oil now is still higher than the last five years averaged together.