The price of natural gas is affecting everyone at the pumps; but for many, filling up the car's tank isn't the only concern.
The cost of home heating oil is on the rise too, currently about 80 percent higher than it was a year ago. For oil companies everywhere, paying more for fuel unfortunately means charging customers more -- a lose-lose situation for both parties.
While prices are usually going down at this time of year, the cost of natural gas has nearly doubled since last year both at the pumps and with home heating. This steep rise in gas prices is spilling over into the oil market, with the price of crude oil at $79.09 a barrel -- the highest it's been since 2014.What's Causing the Price Increase
One cause of these increased prices is low supply, partly due to the fact that OPEC has not increased output. The increase is also partly due to disasters like Hurricane Ida. The resulting damage causes lower inventories which, put up against higher demand, causes prices to spike.
With that being said, members of OPEC decided Monday that they would stick to an existing pact for a gradual increase in oil output -- the alternative being to risk further price inflation.
In an article by TribLive, Dave Talmage, operations manager of Glassmere Fuel, thinks the rise in prices may also stem from price speculators. “They buy futures and then they sell them. And they say, ‘We think the prices are going to be higher, so we’re going to buy now’ — and that drives the price even higher. There’s nothing you or I can do about that.”
Furthermore, Mark Wolfe, executive director of the National Energy Assistance Directors Association (NEADA), explained that part of the recovery from the pandemic recession has been more homes and businesses burning all forms of fuel. This resurgence in demand means higher heating costs for many.
Consumers also got used to the very low prices associated with the pandemic last year, so the increase feels like even more of a shock.
Another reason is that some power providers switch to burning oil if the price of natural gas goes too high, thereby increasing demand for oil and driving prices even higher. Analysts expect these prices to continue to rise throughout the winter. According to NEADA, the cost to warm homes with heating oil or propane could surge 40 percent.
Here at ECI Comfort / MyExpressOil in Bucks County, customers are, understandably, always wondering if the prices will be going up or down. Unfortunately, we just can't tell what's going to happen next. "It's hard to know, no one can predict when we might see lower prices. This market is just too fickle," says Robert Sinclair, spokesperson for AAA.
Prices can fluctuate daily due to supply and demand pressures along with other factors, and there's no way to control the market or the weather. With expectations being further price increases, your best bet is to fill your tank ASAP.
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