Why Are Fuel Prices Trending Higher This Year? | LG Jordan Oil
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Why Are Fuel Prices Trending Higher This Year?

Learn About the Many Contributors to Current Propane and Heating Oil Pricing

oil prices north carolinaIt’s been a tough year when it comes to the prices of everything—from groceries to electronics to cars, we’re noticing increases across the board. Fuel pricing has been affected by this as well.

Natural gas prices are up more than a dollar per gallon when compared to last year. Natural gas rates have risen by more than 150%. Crude oil costs have surpassed $80 per barrel—which hasn’t been seen in seven years. Wholesale propane prices have also hit their highest weekly average levels in seven years.

The price of electricity has additionally been impacted. Higher natural gas costs are driving up the cost of wholesale electricity due to heavy reliance on natural gas-fired power plants.

What’s going on? A litany of things. Here, we break down all of the things that can impact how much—or how little—you pay for your home’s propane or heating oil and it’s effects on both you, the consumer, as well as our business.

The Factors Behind Propane Pricing

Supply and Demand. The price of a commodity may vary significantly depending on demand. If the winter is severe and lengthy, prices will rise alongside it. The increase in propane exports to meet global demand can impact our nation’s propane supply. Propane pricing is affected by a variety of things, including the time of year and production and inventory levels. It’s also worth noting that the “shoulder seasons,” or the late Spring and early summer months, are frequently a good time to have us fill your propane tank since these seasons tend to be when prices are at their lowest.

Weather. The cost of propane may rise when the weather is cold. Extreme temperature swings, as well as harsh conditions like rain or snow, can have an influence on propane generation, causing a shortage that raises prices.

Proximity of Supply. The price of propane will typically be lower the closer you live to a major propane distribution area.

Current Events. Fuel costs are influenced by things that are going on nearby or across the world, including oil spills, pipeline malfunctions, cyberattacks for ransom, geopolitical conflicts and turmoil, and the COVID-19 pandemic, which has disrupted many industries in the United States.
Market Need. Customers will pay more for propane in the winter when they need it the most for home heating. Commercial propane usage rises in the summer months when propane-powered vehicles and equipment are utilized more frequently.

The Factors Behind Heating Oil Pricing

Crude oil pricing. The cost of crude oil, which is one of the most significant drivers of heating oil prices, accounts for approximately 75% of the overall price. It’s also prone to wild swings in price. Because crude oil is a globally traded commodity, it is influenced by changing global market forces. Natural disasters in areas of production and refinement, supply chain difficulties, and political conflicts can all have an impact on the price of oil, which affects what you pay for heating oil in turn.

Weather. If a winter is exceptionally severe, you can anticipate higher heating oil costs because demand is high while supplies are limited. If the weather is nice, there will be less demand and therefore lower heating oil prices.

Alternative Fuel Pricing. If the cost of alternative fuels increases or shrinks the need for heating fuel, you’ll see a change in heating oil pricing.

How Our Business is Impacted

People sometimes misunderstand how negatively all this impacts us, as well.

We don’t make more money when prices rise like this; we make less. Think of it this way: it’s like when the cost of coffee, milk or oranges rises. It’s not the local grocery that is profiting. (That’s left to the Wall Street investors.) Customers may have a harder time paying their bills. They reduce expenditures. We need to tap into our lines of credit more. Our phones light up with questions. At the end of the day, the sooner energy prices drop, the happier we’ll be.

Managing Your Fuel Costs

LG Jordan has been meeting the fuel needs of the greater Apex area for 97 years. With that longevity comes the knowledge, experience, and strong relationships with our suppliers to do the very best at keeping your heating oil and propane prices as low as possible. We are doing everything possible to ensure we can deliver—even if other companies cannot—no matter the cost or difficulty we face.

We’ll help you manage your fuel costs with programs such as our Budget Payment Plan, where your heating oil or propane costs are spread out over easy, monthly payments. Ask us how to enroll if you haven’t already.

If you find yourself in a position where you’re struggling to pay your heating oil or propane bills, please get in touch with us before you fall behind so we can work out a solution. You can also look into North Carolina’s Low-Income Energy Assistance Program.

Please contact us today with any questions or concerns you have about propane or heating oil costs—LG Jordan is ready to assist you wherever we can.