Jump in the price of Home heating oil

Despite hopes that prices would remain steady this year, home heating oil prices have rocketed at the start of this week by an average of £15 (and by around £20 since last week).

For example, Emo Oil in Belfast have increased their price for 900 litres by over £40 in a week from £283.50 last Wednesday to £326.03 for 900 litres by the following Tuesday morning. Just about all suppliers surveyed by CheapestOil.co.uk have increased their prices with some increasing their prices every few hours.

This comes at the same time that crude oil as jumped to a 4 month high of around $54. On Friday, crude oil rose to over $50 for the first time this year. The increase is attributed to a stock market rally on news in the US of a plan to buy toxic assets and reports regarding an improving housing market.

Demand for oil is still considered to be weak with the price predicted to reach $60 per barrel this year.

Home Heating oil prices compared to crude oil prices

A question often asked is "why is home heating oil not the same price as it was when crude oil was this price?".

Such a question made headlines in NI (Northern Ireland) in late 2008.
There may be discrepancies but the biggest reason for the difference is in the exchange rates (as oil is priced in dollars).

In November 2007, $64 would have been just over £30. In November 2008, $64 would be around £40. This sort of difference alone would mean oil priced at £300 one year could cost £400 the following year.

If the price of crude oil remains steady and the pound gains strength against the dollar then there is no reason why we can't see even cheaper home heating oil.

For the UK, including Northern Ireland, the big question should not be how many dollars a barrel of oil is but how many pounds a barrel of oil is. Although the crude oil price has dropped quite a bit, consumers haven't got the full benefit of it because oil is priced in dollars and the pound has been weak recently against the dollar. For example, anything that cost US$45 would translate as £22 in the summer but cost £30 now so the exchange rates have been working against the price drops of oil.

However there is only so far it can go. Oil distributors would be quick to point out that they sell kerosene, not crude oil and that other cost factors need to be taken into consideration. If the price of a barrel of oil was free, that doesn't mean someone is going to get it refined into kerosene and deliver it to your house for free. There are costs that are going to be more static than the stock market prices.

We maintain a list of stock market versus home heating oil prices on our website.

About http://www.cheapestoil.co.uk/ : Since this is our first blog entry, here is a bit about ourselves. Cheapest Oil Limited operates http://www.cheapestoil.co.uk/ and http://www.cheapestoil.ie/ . The Cheapest Oil websites are independent home heating oil price comparison sites for Northern Ireland and the Republic of Ireland. Independent means that we are not affiliated with any distributor and so no commission is paid.