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The Oil Market & Price Fluctuations Explained

Fuel Price Spikes Can Be Alarming, But You Can Count on Oehlert

fuel prices pennsylvaniaIt’s no surprise to most of us that as the price of crude oil spikes, so does gasoline, heating oil and the many other products derived from it. And when global crude oil prices soared to over $100 per barrel for the first time in eight years after Russia invaded Ukraine, that’s exactly what happened. This compounded the already existing price issues stemming from supply shortages and inflation.

This scary spike in fuel prices is hard on all of us, but with Oehlert Bros., you don’t have to worry about fuel run-outs and delays, and we may be able to help you with our SmartPay program if you have trouble paying your bill. Read on to learn more about heating oil price fluctuations. Please reach out to us with any questions, or if we can help you navigate this challenging time and help you find solutions.

Factors Causing Oil Supply to Lag

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.

Save Big by Going Greener

Investors are drawn to 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 Plus® heating oil, which is cleaner-burning than traditional heating oil, resulting in reduced greenhouse-gas emissions. The use of Bioheat Plus heating oil is an important step in heating oil’s evolution toward achieving carbon neutrality by the year 2050.

In addition to being environmentally friendly, Bioheat Plus heating oil 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 Plus heating oil, which you’ll see reflected in your lower bill. Plus, Bioheat Plus works on regular heating systems—no change is needed!

The Market Remembers

Saying that we are currently in the midst of an extremely volatile energy market could be viewed as an understatement. 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.

Russia’ Impact

Russia’s influence on the market stems from its role as 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.

What Comes Next?

It’s impossible to say exactly 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 in Pennsylvania, and throughout the country.

Until then, trust Oehlert Bros. 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.