In recent years, consumers have often tried to save money on their heating oil by prebuying it in the fall. This practice has served to protect some US residents from exploding fuel oil costs in the middle of cold and snowy winters. With the falling price of oil, you may wonder if you should still try to prebuy now while the cost is low. Surprisingly, prebuying your heating oil for 2016 may not save you money.
Current Oil Prices
According to the US Energy Information Administration, homes that use heating oil can expect a significant reduction in fuel costs this winter. The average cost should be $459, 25% less than last year. This price break comes as a result of falling crude oil prices, which were at $50 a barrel this October, combined with expected warmer temperatures. This trend is especially important to those in the Northeast who endured a horrible winter last year. Of course, these weather predictions are not always accurate. The severity of last year's weather on the east coast was not anticipated by the experts. However, the current oil supply is good and prices per barrel are far below what they were even a year ago.
Although prebuying has helped consumers in certain years, the practice is meant to protect the suppliers as well. If you prebuy, they do not have to worry about unpaid bills, and if the price of oil dips, they have increased profits. You can usually purchase "downside protection" that allows you to pay a lower price if the cost of oil falls. However, prices would have to drop drastically for you to benefit from the plan. For 2016, the expert advice is to only prebuy if you can get your heating oil at under $2.30 a gallon without buying "downside" protection. Otherwise, paying the going rate for your oil is a better bet if you want to save money.
The coming winter looks like a good one for consumers in the United States. Overall, the weather is supposed to be warmer and the price of heating oil lower. After the 2014/2015 winter, that is good news for everyone. Of course, Mother Nature is often fickle, and she could surprise you once again. Even so, the price per barrel of oil is surprisingly low, and prices should stay low through the foreseeable future. If you need to prebuy to feel comfortable, do so. Just know that you will probably save money if you wait. Contact a service like Small & Sons Oil Dist Co for further information.