If you currently have a furnace that runs on heating oil, then you are familiar with the constant up and down pricing that can leave you guessing about the cost of heat next winter. While the fuel delivery companies only play a very small part in the pricing, the real pricing issues come from other sources. If you want to try your hand at predicting when fuel prices will go up or down, here is what you should watch for.
The Cost of Crude Oil
Crude oil harvested from oil rigs fluctuates in price. It goes up and down, based on availability and the amount of crude oil imported from other countries. Since heating oil is derived from crude oil, watch the price of crude oil. Even if you look at the "price per barrel" numbers, it will show you when crude oil (and subsequently heating oil) has risen or fallen. When you see the crude oil price drop, buy your heating oil then because it means there will very likely be a drop in price.
Supply and Demand
Demand for heating oil is always at its highest right before and during the first snowfall. When demand is high, supply is low, and the price goes up. Likewise, when demand is low, supply is high, and the price for your fuel will either level out or drop. This is why so many fuel experts tell you to buy your heating oil when you absolutely do not need it (e.g., in June or July when it is so hot nobody can possibly think about getting hotter or warmer). If the cost of crude oil drops at the same time that supply is high and demand is low, you have the right set of circumstances for finding and buying cheap heating oil.
New Oil Rigs and Refineries
Another factor in the cost of your heating fuel is the construction of new oil rigs and refineries. New oil rigs means that more sources of crude oil have been tapped and the price of heating oil could drop. While new refineries on American soil mean that the cost of refining crude oil into heating oil, gas and propane can drop, the cost of the new refineries may be passed on to consumers with slightly elevated prices for a a while. When both new rigs and new refineries are erected, some elevated costs may be offset by the fact that there is a greater supply of crude oil closer to home.