Heating oil is used to power furnaces in many homes across the country. Homeowners with oil furnaces must always have a ready supply of heating oil available to ensure they can heat their homes properly.
Most homeowners choose to rely on a delivery service to replenish their heating oil reserves. The cost of heating oil delivery can fluctuate.
Learn why these costs change so that you can be prepared to budget for your heating oil expenses more effectively.
1. Operating Costs
The companies that deliver heating oil to residential properties must be able to turn a profit. This means the cost of delivery services must be greater than the amount companies spend making heating oil deliveries.
Operating costs include things like fuel for delivery trucks, wages for drivers, and the distance a truck must drive to make each delivery. These operating costs can vary, and heating oil companies have to periodically adjust their delivery prices in order to compensate for increases in their own operating costs.
2. Local Competition
Multiple heating oil companies may be operating in areas where oil furnaces are common. Multiple oil providers give homeowners the ability to choose which company they will have deliver their heating oil.
Local competition can have a direct impact on the price of heating oil. Companies will often adjust their prices in response to changes made by their local competitors in an effort to keep existing customers and attract new business.
3. Consumer Demand
Heating oil is a commodity that adheres to the basic economic principle of supply and demand. When demand for heating oil increases, prices will also increase.
If you want to minimize your heating oil costs over time, you must pay attention to seasonal demand. Homeowners typically invest in more heating oil during the cold months. This means that demand for heating oil is highest in the winter.
Plan ahead to purchase your heating oil supply during the summer months, when both demand and prices are much lower. Many heating oil delivery companies are happy to share oil pricing information that can help you pinpoint when oil will be the cheapest.
If you rely on heating oil to power your home's furnace, it's essential that you understand why the price of heating oil can fluctuate throughout the year. An understanding of the factors affecting heating oil prices puts you in a better position to reduce your fuel costs.