The morality of energy – is Heating OIL actually the most transparent energy source of all?

Petrol prices are tumbling and according to the BBC heading to “four year lows” ( Surely this can only be good news for consumers, right? Well yes, but no, because I would say “about bloody time”. Am I never satisfied? Well, no I am not when it is obvious that the price has been too high for too long and this is more like window dressing than actually playing catch up.

Unleaded at 123.9ppl and Diesel at 127.9ppl are a relief when compared to where they have been,

Petrol October 2014

but the price of crude OIL has been plummeting for several months and with a barrel now costing way below $90 it has dropped over 25%. What reflects as a fair reduction at the pump is not too easy to work out, however, step forward Heating OIL to give us some insight in the transparency of a fair reduction.

Yes the much maligned supply market that is Heating OIL is my benchmark here. Heating OIL has had a really positive year. Prices have been low and getting lower pretty much without too much exception since the autumn of 2013. In fact, ever since the biggest energy suppliers of the other major sources of energy have rarely been out of the public domain for all manner of shenanigans – some of which each of the BIG SIX have been fined for at some time in recent history – including the usual round of price increases. It will be fascinating to see where prices go this time around: anyone want to put money on a round of huge consumer satisfying price cuts in November? No, me neither. However, many consumers are now paying over 25%,  and some even 30%, less than they were this time last year for their Heating OIL.

Why is this? It is actually pretty complex as to why on one level, given it is a combination of local, UK wide and international issues. However, on another level it is really simple, because the structure of the pricing model and just how competitive the market is in most regions, actually dictates where most prices are right now. Heating OIL suppliers have to reflect increases and decreases of the wholesale price much more closely than petrol, diesel, gas, electricity or LPG, if they don’t they lose business because their competitors do!

So, are the falls in petrol prices big enough? No! When you compare the price drops for heating OIL and you know where the wholesale price has plummeted for all OIL byproducts, there is no doubt that petrol and diesel retailers are making exaggerated margins out of the UK public simply as a result of not passing on the decreases. One wonders where the blockades are that met the first jump through the £1 per litre jumps.

So, does that really mean that Heating OIL is the most transparent energy source/OIL based product? I actually do believe that it is a far fairer reflection of what is really happening on the world’s markets to the price of OIL and gas than not just petrol and diesel, but mains gas/electricity and LPG…currently!

Only currently?  Where next for Heating OIL is one very important question. Right now Heating OIL users feel like they have not had it so good for about four years. And they are right. But the trap door of complacency, whilst not gaping wide open, is certainly ajar, because there really is a very imperfect storm brewing for them. 

What is the imperfect storm heading their way…watch this space OIL buyers.