Where are fuel prices headed?
Unfortunately, no one can answer this question. While prices may seem high now, they are considerably lower than two years ago. Fuel prices are just following a natural trend of ups and downs as a result of market conditions.
Some of the factors that can cause fuel prices to rise and fall are:
* Inventory
* Demand
* The economy
* Severe weather
* Geopolitical events
* Speculation
There is a strong consensus that speculation has played an outsized role in the price extremes we have seen in recent years. Speculators from giant banks, hedge funds, and even pension funds “bet” on which way the fuel markets will move, hoping to make money from their investments.
Speculators don’t use or deliver a single drop of fuel. For them, volatility isn’t a problem; it’s an opportunity. But homeowners get caught in the whipsaw effect of increased costs and uncertainty, and it hits them in their wallets. For fuel dealers, the cost of hedging programs—the “tool” we use to protect your price—has risen dramatically.
There is legislation pending or under consideration that would prevent excess speculation. But regardless of what transpires from this effort, you can take matters into your own hands by doing everything you can to reduce the amount of energy your home uses. We have lots of ideas to help you with this.
Fuel prices are cyclical by nature, but the spike of 2008 was definitely an exception, not the rule. Although oil
Here are some more ways you can minimize your winter heating bills and maximize your comfort.
- Remember that efficiency beats switching fuels. The Consumer Energy Council of America says switching fuels is a “costly and long-term gamble;” you can lose thousands in conversion and installation costs. To reduce your fuel bills, the best solution is to invest in efficiency.
At HB McClure, we appreciate your business, and we will continue doing everything possible to give you the best value for your hard-earned money.
