Predicting the Average Price of Heating Oil

As most people who use oil for heating have found, the price of heating oil has for the most part been lower than it was for the winter of 2007-2008. This drop has followed the remarkable decline in crude oil prices that has accompanied the recession that has hammered the United States and much of the rest of the world. Most experts agree, however, that the current lower prices (about $42/bbl on January 19, 2009) will not remain at this level over the long term. All the factors that were instrumental in driving crude oil prices up before the economic collapse are still in place: increasing world wide demand, declining world wide reserves and general lack of development of new reserves. Some forecasters see the price rebounding to as much as 113% above the current price by the end of 2009(www.moneymorning.com).

The variables that influence the price of heating oil are: price of crude oil, cost of refining, cost of distribution, profit and misc. costs such as advertising. To help people plan ahead P. W. Fox has prepared a prediction table, using data provided by the U. S. Department of Energy. The table gives an average U. S. price for heating oil in $/gal for a given price of crude oil given in $/bbl. The table is available, free of charge, from www.pwfox.com .

This table should be used as a general guide only, since many factors in addition to the price of crude oil affect the heating oil price.