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Commentary: What we’ve learned about home heating oil prices

Brian LaPointe, President

When we boil down our experience with home heating oil over the past five years, we have learned two essential lessons:

1. It’s impossible to outguess the market. It’s not only impossible to know what the market is going to do, but the harder you
try, the worse off you are. I cannot think of even one price prognostication that was even close to being correct. When the conditions point to the price going up, it goes down. And when all the traditional signals suggest that the price should drop, it goes up.

The reason for this was made clear on January 11, 2009, when CBS’s 60 Minutes examined the issue. Petroleum Marketing Association of America’s Dan Gilligan pointed out that 60% to 70% of oil contracts in the futures market are not held by those who need and use oil but by speculators. “All they do is buy paper in the hope that they can sell it for more than they paid for it before they actually take delivery.”

You can see why trying to predict the price of a gallon of home heating oil in the short term is impossible, let alone a year in advance. Yes, there are ways to protect your purchases, but that has a price tag, too, which only serves to raise prices.

2. Oilheat continues to deliver more heat per dollar than any other form of energy, including natural gas. In fact, oilheat customers consistently get more comfort at a lower price than natural gas. That may sound self-serving, but it’s true. For example, home heating oil burns at a much higher temperature than natural gas. One gallon of oil has 144,000 BTUs and the equivalent amount of gas (which is a therm) has only 100,000 BTUs, so you get more heat in a gallon of oil. If you want to know more, give us a call and we’ll get you the information.

As a family-owned business, our objective is to satisfy our customers. That’s what keeps us in business and that objective guides every decision we make.