May 18, 2022 update
We know many of you are looking at the energy cost increases and wondering when this will end, and I don’t blame you. Our goal is to keep you in the loop as much as possible, even though the situation remains very fluid.
Last week, our suppliers again raised prices over 65 cents per gallon over a few days. The reasons are complicated and seem to be affecting heating oil and diesel fuel much more than gasoline.
The driving factor is that both are in abnormally short supply now (heating oil and diesel are pretty much the same things). In fact, if you look at prices on the commodities exchanges, they show heating oil at a dollar less than we can get it at! That never happens. It’s called “basis blowout” and reflects a disconnect between the markets and actual supplies.
The good news is that the supply issues are happening because the markets expect heating oil to go lower by a fair amount over the next several months. Fuel suppliers are reluctant to purchase fuel now and get stuck with higher priced product. The bad news is that it is causing prices to be artificially higher now, and no one really knows for sure what will happen with the Ukraine war. The war is also causing a historic amount of diesel fuel to be shipped to Europe, which is impacting heating oil as well. By the way, we are seeing the same kind of surges in Natural Gas and electric costs.
We decided to hold off most deliveries save for those who seemed to be running low. It didn’t help that we’ve had an unusually cold spring, and people are still using their heat. Beyond that, we want to urge people to get on our budget billing program, which allows us to spread your fuel payments over 12 months. If prices do stay high next year, it will be much easier to manage your bills if you don’t have to pay for all of your deliveries in just 5 months of fall and winter.
There is no way of knowing whether prices will rise or fall going forward. However, we will do our best to keep you in the loop as things emerge.
If you have any questions, don’t hesitate to call our office. We are here for you.
March 9, 2022 update
Unsurprisingly, we’ve been getting many calls around two connected issues- the surge in fuel prices and supply concerns. People are astounded by how much prices have risen, and how fast. They are also concerned that there will be interruptions in supply that will cause them to run out of fuel.
Prices were already up more than a dollar this season from the previous year because of issues related to the pandemic. Then, the Russian invasion of Ukraine shocked the energy markets, sending crude oil up to over $120 per barrel.
To give you a sense of this of how this affects us and you, on March 2, we received notice at night from our suppliers that their prices were going up 20 cents the next day. Then, on March 3, they went up three more times- a total of 60 cents in just 24 hours.
We don’t know where things will go from here. One thing we can tell you is that we hate this as much as you do. Some people are under the misconception that when prices rise, we make more money. The opposite is true. People cut back usage. They have trouble paying their bills and our receivables skyrocket. Meanwhile, we must pay our suppliers in just 10 days. We must borrow much more from the bank. It is an awful mess for everyone.
One thing you can count on is that we will not let you run out. We have been in many years and have very strong relationships with suppliers and financial institutions. We are already getting calls from customers who are with other companies who can’t say the same, and who are unable to get deliveries for 20 days out. You don’t have to worry about that with us.
If you have having trouble paying your bill talk to us. Many times, we can work out something to give you more time, especially if you’ve been with us a while. Remember that we do offer price protection options and will be coming out with those sometime mid-April.
Nothing will make us happier than when prices start dropping. Until then trust us to look out for you and pray for the people of Ukraine.