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What factors affect heating oil prices?
What factors affect heating oil and why?
Heating oil prices can fluctuate for a number of reasons, we are going to go into each factor and why this affects prices.
1. Weather
Harsh weather can create issues for oil production due to freezing temperatures, this can affect the crude oil and the delay the transportation of oil. When oil demand is high and supply is low prices increase.
2. Demand
The key factor for why heating oil increases in the winter is demand. Keeping your home warm is vital for your health and your families comfort, most people will use more heating during colder weather. This means the demand for heating oil will increase in autumn and winter, which results in higher prices.
3. OPEC
OPEC –(The Organization of the Petroleum Exporting Countries), decided whether to increase or decrease oil production depending on demand. If OPEC decides to decrease oil production heating oil prices usually rise.
4. Conflict in oil producing countries
Conflict in oil producing countries can create issues for heating oil prices, as this can cause a drop in supply and issues with transportation due to sanctions and wars.
5. Vat rate fluctuations
If V.A.T rises it affects everything that we pay tax on, which means price rises would also affect heating oil.
6. Distribution and delivery costs
A lot of oil is exported from abroad which means we have to distribute it to reach our country if delivery to distribution costs rise we can end up paying more for heating oil.
7. Refining costs
If there is a dramatic change in Equipment needed, wages and cost of running of the refinery increases we may see a rise in oil prices.
8. Exchange rates
As a larger percentage of oil is brought aboard exchange rates play a part in potential heating oil price rises. If the countries currency exchange rate drops oil prices rise as the country will get less for their money than before.
9. Crude oil prices
As crude oil is needed to produce heating oil, if the price of crude oil rises so will the price of heating oil.
