How We Discount Oil Prices
Here in Connecticut, the price of home heating oil usually rises and falls with the weather — literally. In the winter, when demand for home heating oil increases, so does the price. Other factors — local, national and international — may cause prices for home heating oil to change several times in a single day.
Why worldwide oil prices are so high
While many politicians and U.S. oil industry companies claim that U.S. drilling levels can significantly affect pricing, this is unsupported by historical facts or common sense. Global markets, not U.S. markets, set the price that refiners pay for crude oil. The United States’ share of worldwide oil production, usually estimated at less than 10% of worldwide oil production, is too small to move prices by more than a few cents either way.
Here are a few reasons why oil prices have risen so much in recent years:
Increased international demand
Strong demand from a huge wave of new middle class consumers in India and China has caused worldwide oil demand to increase and resulted in higher prices. This situation was predicted back in 2007 by the International Energy Agency, which warned that demand for oil imports by China and India will almost quadruple by 2030.
The weak dollar
Driven by a weak economy, high federal government spending and an increase in the United States’ international debt, the dollar’s international purchasing power has gone down. This makes oil more expensive for the United States.
International events and uncertainty
Prices are affected in the short term by actual and potential supply disruptions such as drilling accidents and warfare in Nigeria; disputes in Syria, Yemen and Israeli-Palestinian territories; concern about attacks on Middle East oil pipelines and processing centers; and Western sanctions on Iran over its nuclear program. Again, these factors affect worldwide prices. This uncertainty can also allow speculators to drive up prices.
Our pricing advantage
Connecticut Oil Direct is not on any heating oil price-comparison websites, but because our business costs are lower than traditional residential oil service companies, we consistently offer some of the lowest prices for home heating oil in Connecticut.