NEW YORK (MainStreet) — As any homeowner knows, the second the oil burner kicks on, money starts flying out of the bank account. And while 2015 has seen lower-than-normal heating oil prices, there is no reason to spend more than needed to keep a house toasty warm.
Prices are up, too, thanks to demand for home heating fuel created by February's cold snap. About 7 million of the 118 million households in the United States use fuel oil for heat, according to the U.S. Energy Information Administration (EIA), and 80% of those are in the Northeast, where winter has been particularly rough.
The EIA's weekly Home Fuel Price Index saw the wholesale price per gallon bottom out during the week of January 26 at $1.76 per gallon, but as of Feb. 16 it hit a national average of $2.11. At the retail level, the increase has averaged out to between 10 cents and 15 cents per gallon for those in New England and the Mid-Atlantic.
But homeowners are reporting increases that are markedly higher.
Scott Neuman, a Lakehurst, N.J. resident who uses oil to heat his home, knows first-hand the financial burden an uptick in oil prices can leave when purchasing in bulk.
"I bought 200 gallons on the market three weeks ago at $2.20 a gallon," he said. "I went to price it now and it's jumped to $2.80, while gas has only jumped 20 cents."
Price per gallon varies with the microeconomic factors, such as how much a homeowner orders, and the macro factors, such as ice in New York Harbor blocking and delaying oil deliveries, fewer oil rigs pumping oil in the Gulf of Mexico and utility companies switching over to oil to make electricity due to the rising cost of natural gas, says John Franco, president of Codfuel.
One saving grace for homeowners is that, despite the recent increase, year-over-year prices are still down considerably. The EIA has prices between $1.50 and $1.90 lower per gallon this month compared with February 2014.
There are a few steps homeowners can take immediately to help keep down their heating costs. According to the U.S. Department of Energy, a homeowner only needs to take a quick tour of his home to put a dent in heating costs without spending a ton of money.
- Windows are a great place to start. On sunny days, open the drapes and blinds on south-facing windows to let mother nature lend a hand. Close the drapes on other windows to limit the amount of cold air leaking in. Also, covering particularly drafty windows with plastic acts as an instant insulator; even better, caulk up cracks around a window to seal out the cold.
- If the home has a programmable thermostat, make sure it is set to lower the heat when the house is empty or when everyone is asleep.
- Fireplace dampers should be shut when not in use; if the fireplace is never used, consider plugging and sealing the chimney.
- Install weatherstripping around doors, especially the bottom where a gap sometimes exists.
Another helpful reminder for those not locked into a contract with an oil delivery service: Call around for the lowest price.
"It's important to know that everyone should shop around," said Neuman, the Lakehurt, N.J. resident. "Prices do vary, and your local oil guy might work with you as a longtime customer — I've been with my current guy for 20 years; they've always taken care of me and I'm a loyal customer. I still shop around. But they are my last stop always."
There does not appear to be much relief in sight. Accuweather is predicting below normal temperatures for the Northeast for the rest of February.
"Over the next few weeks price will mostly be determined by weather," said Codfuel's Franco. "Temps at night all of next week will be frigid, so as long as there's iced-up waters, the price will change based on ease or difficulty of barges and tankers being able to dock and offload."
— Written by Doug Olenick for MainStreet
This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.