A dramatic rise in the cost of heating oil over the past several months has been shocking to sellers and customers alike.
“We had never seen above $4 (per gallon), and cleared $4 and $5 this year,” said Jared Trinks, manager of Trinks Brothers Oil in Manchester.
The price for a gallon of heating oil this week was around $5.15, a decrease from a high of $6 earlier in the month.
That’s compared to an average price of $1.90 to $2.30 per gallon in years past, and around $3 at the start of the year, which means a $400 fill-up can now cost $1,200, and many customers are struggling, Scott Glanz, co-owner of Top Tier Fuel in Windsor Locks, said.
Both men say the trouble started at the end of February when Russia invaded Ukraine, upending the market immediately.
“It’s been an adventure,” Trinks said.
Trinks Brothers Oil manager Jared Trinks said prices haven’t been nearly this high for heating oil since the recession of 2007 and 2008.
Matthew P. Knox / Journal Inquirer
Heating oil prices jumped more than $1 in the 48 hours after the invasion, and put him in a tough position filling orders placed a few days before at lower prices, Glanz said.
He said he’s temporarily suspended online ordering after losing $4,700, a large sum for his small company with two delivery trucks.
AVERAGE COST OF HEATING OIL
May 4, 2020: $1.74 per gallon.
May 16, 2022: $6.28 per gallon.
Source: The Connecticut Regional Retail Heating Oil Price Survey.
The rise is even more dramatic considering the way prices plummeted to around $1 a gallon in the spring of 2020, as the COVID-19 pandemic spread.
The Connecticut Regional Retail Heating Oil Price Survey reported the average retail price for heating oil hit a low of $1.73 on May 4, 2020, jumping to $6.28 two years later, on May 16.
The last time prices were close to the current levels was in the recession of 2007 and 2008, when they reached close to $4, Trinks said.
Another aspect adding to the whirlwind is not only the amount of the increase, but also the frequency of price changes.
“So far this year, volatility is the word,” Dale Gerber, co-owner of Homestead Fuel in Ellington, said.
He described a recent typical day in the heating oil market: the price will go up by 10 cents at 10 a.m., increase another 20 cents at 1 p.m., and end the day by dropping 5 cents.
A year ago, a 10-cent swing in one day would have been a little out of the ordinary, he said; 10 years ago, he rarely would have seen those kinds of swings.
Manager of Trinks Brothers Oil, Jared Trinks, talks about the unprecedented increase in heating oil prices during the spring of 2022.
Chris Herb, president of the Connecticut Energy Marketers Association, said it’s difficult to predict how much longer the chaos will continue.
The war in Ukraine is the biggest factor increasing all energy prices, he said. If the war ended, prices would likely drop right away, but no one knows when that will happen, he added.
If a new nuclear deal is reached with Iran, allowing the company to sell its oil, that could also reduce prices, according to Herb.
Bad news in the form of a recession would also lower prices, he said.
How those three situations play out over the next 120 days will determine what customers pay for oil come winter, Herb said.
Herb said he’s heard the same sentiment from hundreds of oil marketers over the past few months: “Thank God it’s not November.”
“Price is an immense concern for everyone involved,” Herb said.
Still, customers are filling their oil tanks after winter, and the current prices are affecting buying habits.
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Top illustration by F. Muhammad / Pixabay