Heating Oil vs. Natural Gas Prices

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

New Jerseyans who heat their home with oil may be thinking of converting to natural gas to escape the stress of paying high heating oil delivery bills next winter. That’s a valid concern, especially if we don’t see relief soon from our current painfully high fuel prices. But take a step back for moment to put things in perspective.

  • For the most part, the price of oil has been fairly stable since 2014. Unfortunately, there have been a lot of changes over the past year or two that have upended the markets, including the pandemic and the war in Ukraine.
  • The current problem of high energy prices, of course, is not limited to heating oil. Natural gas rates have doubled. Electricity costs are surging. And gasoline and propane have spiked skyward as well. If history is a guide, we can expect to see heating oil prices drop pretty significantly in the not-too-distant future.

What about natural gas prices?

But what happens if you do go ahead and convert to natural gas? Well, you would be looking at a potential upfront cost of thousands of dollars. It would take years, if ever, to recoup that cost in energy savings, especially now, with natural gas rates rocketing upward. Read more about the Cost to Convert.

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.
“U.S. natural gas prices have more than doubled this year, and they could soar another 25% or more this summer in the hotter weather.” –- Patti Domm, CNBC, 5/17/22
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