It’s not surprising that we’ve fielded a lot of calls about the price of heating oil and propane lately. Many factors contribute to rising prices, and we want to provide a breakdown of why the fuel that heats your home and water is more expensive.
Firstly, we understand that dealing with the effects of volatile energy markets can be painful. We experience that pain too. Some people are under the misconception that local fuel companies like Woodruff Energy make more money when prices rise. We make less. People cut back usage. They have trouble paying their bills, and our receivables skyrocket. Meanwhile, we must pay our suppliers within 10 days and borrow more from the bank. It is an awful mess for everyone.
We can all take some comfort in the fact that propane and heating oil are highly efficient, safe ways to heat your home and water. Plus, historical trends have shown us that, with energy prices, what goes up eventually comes down. We all hope that happens soon.
Many factors affect the price of crude oil and natural gas: war, political turmoil or natural disasters like tsunamis, earthquakes and hurricanes. Propane is a by-product of both crude oil and natural gas extraction, so propane rates are subject to a ripple effect.
Even before Russia invaded Ukraine in late February, energy prices were increasing in anticipation of potential sanctions on the Russian energy sector. Russia is the world’s third-largest petroleum and liquid fuels producer (behind the United States and Saudi Arabia). So, even the possibility of disruption in the energy supply heavily influenced buying and selling of commodities traders.
As we know, Russia eventually invaded, and the U.S. and other countries placed bans on Russian imported oil and petroleum products. It left a big energy void to fill.
There are plenty of other elements that contribute to fuel price movement.
Supply and demand and extreme weather play a role. For example, if a reduction in supply occurs during a time of high demand, like colder months, a scarcer market develops. In moments of extreme cold weather, customers often panic buy, leading to further shortages.
In the era of COVID-19, these issues have emerged:
We don’t know where things will go from here. One thing you can count on is that we will not let you run out. We have been in business since 1869 and have weathered difficult times before. We understand how important it is to deliver when customers need us most.
If you’re worried about affording fuel when the weather turns cold again, we strongly encourage you to enroll in a Budget Plan for heating oil or propane.
With our Budget Plan, instead of paying large fuel invoices on delivery in colder months, you pay 12 stable, predictable monthly installments. This makes household planning much easier, but importantly, it reduces your winter payment by half!
If you want to enroll in a Budget Plan or discuss your household’s energy use, don’t hesitate to reach out to us. Woodruff is always there for you!