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Lower Heating Oil Prices Means More Savings
When crude oil prices topped the $50 per barrel mark in the first week of October, this led to some panicky predictions that the “era” of low oil prices was about to come to an end.
Well, of course, that didn’t happen! It didn’t take very long before crude oil prices dipped under the $50 per barrel mark again. In fact, since the summer of 2014, crude oil prices have fallen about 60% from their $100-plus per barrel levels.
So what happened? As usual, this was just a temporary blip in the marketplace. In this most recent case, three main factors emerged, all of which made investors jittery:
Monthly U.S. oil production declined a little in the month of September
The U.S dollar slightly weakened
Russia’s intervention in Syria created a new concern in the Middle East (this is known as the “fear factor” for speculators in the energy markets)
At Walton, we stayed calm and carried on
We’ve been at this since founder Clyde Snyder Walton opened a business in 1921 at the corner of Broad and Hancock Streets in Lansdale. We know from more than 90 years of experience that there is no need to panic over the normal daily ups and downs in the energy markets.
We also know that it’s always wise to look at the big picture. Right now, that picture contains a lot of positive signs for the future of heating oil and propane prices. Consider this:
Heating oil prices remain at their lowest level since 2009.
U.S. oil production has reached its highest point in 43 years, leading many analysts to predict that oil prices will stay lower for the foreseeable future.
U.S. inventories of propane have reached their highest level in the 22 years that the U.S. Energy Department has been collecting this data; As is the case with oil, an abundant supply of propane bodes well for prices.
The average wholesale heating oil price stood at about $1 less per gallon than at this time a year ago; wholesale propane prices were about 50 cents per gallon lower than mid-October 2014.
U.S. household expenditures for heating oil this winter are projected to be 25% lower than last winter; propane expenditures should be 18% lower. That’s due to a forecast of both lower fuel prices and lower heating demand.*
The National Oceanic and Atmospheric Administration forecasts overall heating degree days this winter will be 7% lower than last winter and below the 10-year average. (Do you still remember what a warm winter feels like?)
*Source: Short-Term Energy and Winter Fuels Outlook, U.S. Energy Information Administration, 10/6/15