Written on: April 4, 2022
You likely are aware that as the price of crude oil goes, so goes gasoline, heating oil and the many other products derived from it. And that’s just what happened when global crude oil prices soared to over $100 per barrel for the first time in eight years after Russia invaded Ukraine in February. In fact, even prior to the war in Ukraine, there were stubborn supply shortages, as customers began to travel and spend more, once the hoped-for “end” of the pandemic seemed within reach. All these factors sent inflation rates in our country to their highest level in 40 years.
This shocking spike in fuel prices is hurting all of us, but with Swezey, you don’t have to worry about fuel runouts and delays, and we may be able to help you if you have trouble paying your bill. Below, we’ll discuss some of the most frequent questions we hear regarding heating oil price fluctuations. Please reach out to us with any questions, or if we can further walk you through these new circumstances and help you find solutions.
A simplified and misinformed solution to the production shortfall that’s regularly offered up by some pundits and politicians in the U.S. is that “we just have to drill for more oil at home.” But that’s ignoring the tea leaves being read by investors, who realize that a zero-carbon emissions world is not too far off in our future. Big money is holding back on fossil fuel investments as legislators try to move the country toward more renewable energy.
Investors instead are looking to sink their money into long-term, profitable opportunities in the rapidly growing green energy field. By the way, the heating oil industry and local heating oil dealers like us are making excellent progress with making our fuel more dependent on renewable energy, too. Read about our Bioheat® fuel, which is cleaner-burning than traditional heating oil, resulting in reduced greenhouse-gas emissions. The use of Bioheat fuel is an important step in heating oil’s evolution toward achieving carbon neutrality by the year 2050.
In addition to being environmentally friendly, Bioheat fuel leaves fewer deposits on your heating system’s parts. This means that your heating-oil boiler or furnace will last longer and is less likely to break down. It will also work more efficiently with the help of Bioheat fuel, which you’ll see reflected in your lower bill. Plus, Bioheat works on regular heating systems—no change is needed!
Another factor influencing oil companies is the memory of the breathtaking fall of crude oil prices during the early days of the pandemic. In the Spring of 2020, crude oil prices fell all the way to negative $30 per barrel! Traders had to pay buyers to take oil! Since then, however, prices have been steadily rising before they exploded in late February after the Russian invasion of Ukraine. But as quickly as mid-March, crude oil prices had dropped under $100 per barrel again. This was caused by a variety of factors, including the surprise COVID-19 lockdowns in China, small signs of a possible diplomatic solution to the Ukraine conflict, and the biggest drop in four years of “bullish bets” on the market by hedgers. To say that we are currently in the midst of an extremely volatile energy market could be viewed as an understatement.
Russia is the third-largest petroleum and liquid fuels producer in the world, behind only the United States and Saudi Arabia. For that reason, energy prices had been rising in anticipation of the potential sanctions that could be levied on the Russian energy sector if the country invaded Ukraine. Even the hint of a possible disruption in energy supply – the fear factor – can heavily influence the buying and selling done by commodities traders.
When Russia DID invade Ukraine, the U.S. was the first country to place a ban on Russian imported oil and petroleum products, which amounted to about 7% of U.S. imports in 2020. In comparison, Canada ranked number one with 52% of petroleum imports, according to data from the U.S. Energy Information Administration (EIA). But here’s where the fear factor rears its head again: While Russian oil imported into the US amounts to only a few drops in the barrel, the prospect of Europe eventually joining the U.S. in banning Russian energy imports would leave a big void to fill, and those who make their living in the oil markets don’t like that uncertainty.
We don’t know where things will go from here, but we hope this spike is only temporary. Nothing will make us happier than when prices return to normal. Until then, trust Swezey to look out for you when you become a customer. Together, let’s hope that—regardless of what happens with energy prices—we will be soon living in a more peaceful world, where families can be warm, safe, and together.