Do you heat your home with heating oil? Do you feel like you spend too much on fuel, and are you looking for some ways you can cut your heating costs in the coming years? If so, learn how to monitor the oil market before determining whether or not you should lock yourself into a contract with a heating oil supplier. Read on to learn more.
How Heating Oil Supplier Contracts Work
When it comes time to buy your heating oil this year, you'll have an option—lock yourself into a fixed rate with a contract, or forgo a contract and pay market price for your oil. With a fixed rate contract, you'll be obligated to purchase your oil from the same supplier for the duration of the year, and your price per gallon of oil will never go up or down. Without a contract, you'll pay current market prices for each of the deliveries you receive, but you'll be able to shop around and find a supplier who charges on the lower end of the market price range.
Considering The Oil Market
Fixed rate oil prices are great if the market price per barrel is expected to rise throughout the year; no matter how high it gets, you'll always pay the same price per gallon for your delivery. However, if oil prices are expected to plummet as they did in the second half of 2014 when the price per barrel dropped more than 40 percent, you won't be able to reap the financial benefit of the falling market prices. Fortunately, this isn't guesswork; you can base your decision to sign a heating oil contract or not on the state of the market. The World Bank tracks global production of and demand for oil and then publishes predictions about the future state of the market.
A Game Plan For The Next Few Years
While oil reserves have been plentiful in the past few years and led to cheaper heating fuel for homeowners who heat with oil, those supplies are being used up faster than they're being generated, and the World Bank expects demand for oil to increase. What does this mean for you? With less oil to go around and more people wanting it, it's likely that its price will increase. In fact, besides a few small dips, you can expect oil prices to rise steadily from June of 2016 to June of 2018.
Armed with this information, it makes sense that now is a good time to lock yourself into a heating oil contract. While there may be a month or two throughout the next year in which you'll be paying more than market price for your fuel, you'll be getting a good deal for most of the duration of your contract.
If you're wondering whether or not it's a good idea to sign a heating oil contract, study the market before making your decision. To stay on top of the rising fuel costs that are expected in the coming year, contact a heating oil delivery service and let them know you're ready to lock in your rates. For more information, contact companies like http://glendaleheating.com.