For as long as we can remember, fuel price hikes have been a major concern. In as recently as a year, however, the tides have turned. A serious drop in heating oil prices has taken the world by surprise and it seems as though this trend will continue for quite some time. Almost no-one besides the most wizened energy experts and analysts saw this change lurking on the horizon. Oil manufacturers and suppliers are probably still reeling from the shock. This change can only lead to one pertinent question: How Low Will Pennsylvania Heating Oil Prices Drop This Year?
The Official Figures Between Last Year and This Year
The 18.6% drop in Pennsylvania’s heating oil prices is significantly more than anticipated by the few experts who saw the downward trend coming. The U.S. Energy Information Administration foresaw a drop of roughly 15%. So, it truly is safe to say that the hitting the nearly 20% mark was somewhat of a shocker for all. This December, heating oil costs alone will be vastly lower than they have been in previous winters.
In just a few short months, the price of oil per barrel has dropped by around $40. All things considered, that is a serious drop in price which would normally take a few years to achieve. In the weeks leading up to December, oil prices have continued on their downward spiral. Ultimately, this is good news for Pennsylvanian residents whose heating systems depend on oil. Experts are all in agreement that this downward trend could continue on its spiral well into 2015.
Reasons for the Steady Decline in Heating Oil Prices
Essentially, the supply and demand ratio for oil is out of balance. There is a much higher supply than there is demand for the product as people find alternative products in place of oil. Of course, there is also the fact that United States shale production is providing serious competition for overseas oil suppliers.
Beyond United States borders, production of crude oil is inexplicably on the rise. The higher the production rate, the more likely certain suppliers are to drop their prices. Some nations are in constant competition for buyers, dropping the price of their oil to well below where it should be. This has all lead to the overall drop in heating oil prices in Pennsylvania and everywhere else.
When OPEC had the chance to cut at least some of the crude oil production, Thanksgiving Day saw their decision move in the opposite direction. Essentially, authorities have given over-production of oil their blessing, leading to the all-time low cost of $68 per barrel.
If the competition in prices with global suppliers continues to get out of hand, the supply-demand ratio will tip even further out of balance.
The Price of Oil Will Continue to Drop
Analysts believe that the price of oil per barrel will drop to around $50. That is significantly lower than it has been in a long time. On average, the price of heating oil in Pennsylvania hovered just above $3.70 early in December last year. This year, however, the price has dropped below the $3.00 mark. This is a significant drop that eases the bill-paying blues around this time of year.
Many heating oil companies suffered a serious bout of debt after the high prices experienced in December last year. A huge portion of their customers were forced to rely on payment plans in order to keep their heating systems running, which had a negative impact on the companies carrying all the weight. This year, however, things are looking quite different.
From now until March 2015, oil prices may face a further drop of 15%. This will probably be accompanied by a drop in costs for other fuels as well, with propane’s 27% drop at the top of the list. It is important to note that the weather forecast over the winter season will have an enormous impact on these costs as well. If the temperature drops by 10 degrees or more, heating oil prices will drop by a much smaller margin. If the temperature manages to increase by 10 degrees, heating oil prices may drop even further than the estimated 15%.
All in all, it is shaping up to be a more affordable winter this year when compared to the expensive bills that took over in 2013. Consumers may be able to enjoy this state of being for quite a lengthy period on the future, if these downward trends continue as they are.
Speak with your local oil dealer to get today’s lowest pricing. Find a dealer that services your area by doing a zip code search of oil dealers.