Heating Oil vs. Natural Gas Prices

What you need to know about oil and gas prices in New Jersey

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:

  • Thanks to big increases in domestic supply, coupled with a reduction in global demand and a strong U.S. dollar, oil prices recently dropped and are expected to stay stable for the foreseeable future. The U.S. Energy Information Administration has described this as a “new normal” in heating oil prices.
  • Of course, that’s not to say that there haven’t been some ups and downs, which is standard in the commodities market. 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.

What about natural gas prices?

Limitations on the way that natural gas is distributed—along with high demand and consumption—continue to create supply challenges and price concerns.

Storage inventories of natural gas have sometimes been strained, and that leads to price volatility and price increases.

Other factors that may affect natural gas prices

  • Power plants are converting from coal to natural gas faster than expected, causing a significant rise in demand.
  • U.S. suppliers have been rushing to export domestic gas to markets in Europe and Asia, where they can charge more money. A decrease in domestic supply may result in higher prices.
  • According to the Energy Information Administration, natural gas exports reached record levels in 2018, driven primarily by exports of liquefied natural gas (LNG) and secondarily by pipeline exports to Mexico. LNG export capacity is expected to continue growing in 2019 as new LNG export facilities enter service.
"[Heating oil] prices are down right now in many parts of the country..." –-Ryan Trowbridge, Western Mass News, 2/26/20