Written by
Shaun Curtis
on 03 Oct 2019
and updated on
13 Nov 2024
Categorised in
Tips and Advice
Energy costs have been on the lips of many, if not all households over the past few years. Since 2020, energy costs in our country have risen over 70%, most of which between 2022 and 2023. We often get questions from customers asking why the price of heating oil has gone up, or is more expensive than it typically has been. In fact, in November 2024, heating oil prices are at their lowest levels since July 2023, and comparable to December 2021.
Whilst important to keep track of prices, simply knowing the current price isn’t enough, we want to know when the price might change, or when the best time to buy heating oil is. The first of these points, tracking prices, is easy with our heating oil price charts. The second two are much harder to know, or predict. However, there are leading indicators that can help. Let’s explore those.
If we go back to the very start of the heating oil supply chain, Kerosene28 (heating oil) is produced from crude oil. Therefore, whenever the price of crude oil changes, you can expect heating oil to follow.
This isn’t a linear relationship though; it can take a few days for the price of heating oil to change after any changes to crude. Sometimes (especially if there is a short-term blip), the price of crude may be falling even if heating oil prices haven’t changed, or in fact are rising. But it is still a good indicator of how kerosene prices might change.
It’s not just cold weather increasing usage that can push prices up. Snow and ice on the ground, as well as stormy seas can interrupt delivery of kerosene to both suppliers and households. This can lead to short supply, or no supply if tankers can’t dock at ports, which will increase the price. The chances of running out of oil in winter are much greater with increased use and failed delivery due to snow and ice.
A smart move to help is ordering before the winter rush (when prices are often more favourable), or ordering lower volume top-ups more frequently to guarantee enough in your tank.
Similar to the point above, a key factor for why heating oil increases in cooler weather is demand. Keeping your home warm is vital for your health and your family's comfort, most people will use more heating during colder weather. What this mean is more people will be ordering, reducing supply and potentially increasing prices.
You can help ease this by monitoring how much you use and when, so you can plan for top-ups when prices are lower. Alternatively, let us take away that chore with Connected - automatic ordering when you need it, at our best price, in one monthly payment.
OPEC are one of the biggest drivers of changes in crude oil prices (which we know impacts heating oil). The Organization of the Petroleum Exporting Countries (OPEC), decide whether to increase or decrease oil production depending on demand. If OPEC decides to decrease oil production, heating oil prices usually rise, and vice-versa.
There can be political drivers behind these decisions, but while you may not be able to control this, you can stay ahead and informed by keeping track of OPEC meetings before they happen.
Again, while there is little an individual can do in these situations, by keeping updated on news and checking prices regularly, you'll give yourself the best chance of paying a good price.
The geo-political landscape in oil-producing countries has a big impact on oil prices in general and can become a vicious circle. When there is tension between these countries, demand and crude prises due to uncertainty. Depending on sanctions, or transport difficulties in warzones, this makes moving oil trickier, reducing supply and further increasing prices.
Government changes can also affect home heating costs. While this is usually announced with plenty of warning, VAT rises affects everything that we pay tax on, which means price rises could also affect heating oil.
Even if there is no increase in VAT for heating oil, other tax rises could trickle down to the consumer. As oil is delivered in large, heavy tankers that use a lot of fuel, an example of this would be fuel duty; if supplier costs to deliver your oil rise, it could be passed onto customer prices.
In the UK we import some of our oil from abroad, which can mean added costs at delivery and distribution stages. Especially if depots are remote and far from oil terminals, which ultimately means a higher cost to the consumer.
We work with local suppliers across the UK to find you the best deal in your postcode, and group orders daily to help lower these delivery charges.
As with many manufacturing facilities, if equipment needs to be changed because of regulation, these costs can be passed onto the consumer. The cost of wages for those working at refineries is also calculated in final prices.
As a larger percentage of oil is bought aboard, exchange rates play a part in potential heating oil price rises. If the country's currency exchange rate drops oil prices rise as the country will get less for their money than before. Likewise, exchange rates can swing in favour of the consumer.
It’s important to remember that many of these factors are linked to one another.
When the weather turns cold, households turn their heating on, using oil more quickly. This means that lots of people will need to top-up their tanks in a short period, increasing demand and prices. Crude price fluctuations (up and down), regardless of causation can also increase demand, as households read the news and because of price uncertainty, they stock up.
By quoting and ordering with BoilerJuice, you get the peace of mind that we’re finding you our best price. With over 180 local and national heating oil suppliers in our network, we can always find you a great deal, wherever you are in the country.
