Heating Oil Prices Continue To Tumble

Fuel price hikes have been a major concern for as long as we can remember. However, the tide has turned within the past twelve months. The world has been taken by surprise as heating oil prices have tumbled and it appears the situation is unlikely to change in the near future. No-one but the astute analysts and energy experts foresaw the drop in oil prices. Oil suppliers and manufacturers are almost certainly still trying to come to terms with the situation. The drop in the price of heating oil can only mean one thing: How much further will Pennsylvanian heating oil prices drop in the next twelve months?

Last Years and this Year’s Official Figures

Last year, Pennsylvania’s heating oil prices dropped by around 18.6%. The price drop exceeded the predicted drop, as forecast by energy experts who foresaw the downward trend. The United States Energy Information Administration predicted a 15% drop. So, we can safely say, the nigh on 20% fall came as a big shock. As a result of this, heating oil prices for this winter will be far lower than in previous winters.

Within the space of a couple of months the cost of a barrel of crude oil has fallen by approximately forty dollars. Under normal circumstances, this serious price-drop would have been phased in over a couple of years if not longer. But oil prices have continued to fall in the weeks leading up to December. In the long run, this is welcome news for people who live in Pennsylvania, especially those who rely on oil to heat their homes. The energy experts are in full agreement that oil prices could continue to fall way into 2015.

The Reason for the Gradual Fall in the Price of Heating Oil

In short, the demand and supply for oil is not as it should be. Fewer people are using heating oil; they are looking for alternative ways to heat their homes. Naturally, shale production in the United States is now posing a serious threat to oil suppliers.

Production of crude oil outside of the USA is rising. If a glut of oil is produced a number of suppliers will have no choice but to drop their prices. Nations who are desperate to sell their oil are likely to lower their prices further to offload the excess oil. This has most definitely led to the drop in heating oil in Pennsylvania and many other regions.

OPEC was given the opportunity to reduce crude oil production; however, on Thanksgiving Day they announced they had decided against reducing production. The powers that be allowed too much oil to be produced and this has resulted in an all-time low oil price of just sixty-eight dollars per barrel.

If they continue to produce more oil than needed competition between global suppliers will be fierce.

Oil Prices Will Carry on Dropping

The analysts feel the price of a barrel of oil could drop as low as fifty dollars. In December of last year, the average price of heating oil in Pennsylvania hovered at around $3.70. This winter, the price of heating oil is set to fall below $3.00. This is a notable price-drop that will help homeowners to keep warm without worrying about heating costs.

Numerous heating oil firms were in debt after the oil price rises of last December. Many customers had to enter into payment plans to enable them to keep their home heating systems operational. This had a negative impact on the oil companies because they were expected to bear the brunt. However, things are looking very different this year.

Oil prices could tumble by another 15% by March 2015. The price of other fuels may fall too. In fact, the price of propane is expected to fall by around twenty-seven percent. The forthcoming winter’s weather forecast will impact on future fuel costs. If temperatures fall by ten degrees or more, the price of heating oil will not fall as low as expected. On the flip side of the coin, if the temperature increases by ten degrees the cost of heating oil could tumble further than initially predicted.

The majority of Pennsylvanian citizens can look forward to a more comfortable and affordable winter. In 2013 the sizable heating oil bills caused great alarm and many households fell into debt. All in all, home and business owners in Pennsylvania may be able to reap the benefits of cheaper energy for the foreseeable future if the fuel prices continue to fall as predicted.