Today, many people are wondering if changing heating fuels is a smart way to save. Given current natural gas prices and falling heating oil prices, is that a wise decision? Consider this:
- Oil prices just recently hit a 13-year low. And heating oil prices are half of what they were just a few winters ago.
- Heating oil prices have remained low for a year now, due to the combination of a huge surge in oil produced in the U.S., continued weak global demand and a strong dollar.
- During the winter of 2014-2015, we saw natural gas spot prices rise at the very time oil prices were falling.
- During the winter of 2013-2014, natural gas prices spiked because pipelines could not distribute enough fuel. At one point, the spot price of natural gas was higher than the equivalent retail price of heating oil, when compared on a BTU by BTU basis.
Rising and falling prices are normal in the commodities market. And because there is no such thing as permanently high or permanently low prices, switching fuels to capture a temporary price advantage in one fuel has always been like trying to time the stock market. This is especially true now, with heating oil prices falling by more than $1.50 per gallon in many places across the state.