Oil Prices -vs- Gas prices in the area

[DooDoo1402]

I just had my home oil tank topped off by Besche Oil, and I am amazed (perhaps confused) what the basis of their pricing is. Before the rise of $4 a gallon for gas, the oil price always stayed commensurate to the gas prices. This is the first I was filled since the drop. Gas prices out there are around $1.75 a gallon. But Besche charged me $2.49 a gallon. I think this is more local price gougeing... is anyone else noticing this, or am I alone. Is there anything anyone can do? If you call the local distributors, they claim the price changes everyday, just like the gas prices... so why are they tacking on $7.40 if the oil prices are usually around the same cost/price? Any discussion?

 

[Larry Gude]

...

I just had my home oil tank topped off by Besche Oil, and I am amazed (perhaps confused) what the basis of their pricing is. Before the rise of $4 a gallon for gas, the oil price always stayed commensurate to the gas prices. This is the first I was filled since the drop. Gas prices out there are around $1.75 a gallon. But Besche charged me $2.49 a gallon. I think this is more local price gougeing... is anyone else noticing this, or am I alone. Is there anything anyone can do? If you call the local distributors, they claim the price changes everyday, just like the gas prices... so why are they tacking on $7.40 if the oil prices are usually around the same cost/price? Any discussion?

...Beshce stores oil. They also buy, I am guess, on futures contracts. They may well be delivering to you oil that they bought and received at $2 or so a month or two ago or oil they bought 2 months ago and paid $2 for that they just received, thus, you are not being ripped off. They simply can't sell you $2 oil at $1.75 and stay in business.

A gas station goes through a tanker a week or more so, the pricing ups and downs are much more immediate.

So, how long has Besche had that oil? I have no idea, but a month or two ago, when the oil cost them more, doesn't seem unreasonable. They are getting oil now at $1.50 +/- and you will see oil you receive in February or March continue to go down in price because of that.

They can't wait for your order of 200 gallons or whatever and then run out and buy 200 gallons on today's price and then ship it. Their economy of scale dictates they keep so much on hand, 10's of 1,000's of gallons, to make sure that when you do need it, they do have it. So, storing it, being able to do the primary job; get you oil when you want it, has some additional costs associated with it.

Since 2004 when all of this started spiralling out of control, home heating oil and diesel did become farther apart, so, you're right there. It has remained that way, fair or not. As to why this is, that I can't readily explain.

FWIW, I don't think you're getting ripped off.

 

[GWguy]

You're not getting ripped off.

Are you a contract customer or did you just order some fuel? Contract customers get better rates.

 

[County_Boy]

$2.49 per gal. for fuel oil is pretty much a fair price from what I have seen lately.

non contract Heating oil prices (towards the end of last years heating season)
were around $4.00 per gal.

I usually find that the average difference between retail Heating Oil and
gasoline prices is 60 -70 cents per gallon, with heating oil being more expensive.

The first Heating oil delivery I received in my first house (back a FEW!!!...
years ago....... was .18 cents per gal.

 

[frogman123]

They went down to 2.49? That's the best they have been in a long time. At the end of the summer it cost me $561.00 for not even a half tank (275gal). And this last time (a couple weeks ago, it was $327.00

 

[Cowgirl]

I called a company in DE (because it's cheaper than our local one) and they have it for $2.49 also. They said it's jumped up about $.30 since Jan 1st.

 

[smilin]

Thats not gouging (at least not much) Heating Oil is the same as Diesel with a dye added. Besides the additional road taxes you pay, Diesel and Heating Oil should be close.

Just paid the same from Burchoil. $2.49 must be the going rate. I thought it was great as I hadn't checked on prices since the $5.00 a Gal. scare last summer.

 

[DooDoo1402]

...Beshce stores oil. They also buy, I am guess, on futures contracts. They may well be delivering to you oil that they bought and received at $2 or so a month or two ago or oil they bought 2 months ago and paid $2 for that they just received, thus, you are not being ripped off. They simply can't sell you $2 oil at $1.75 and stay in business.

A gas station goes through a tanker a week or more so, the pricing ups and downs are much more immediate.

Well, with your response, I would almost think you have a stake in the distributorship. I spoke with a few distributors in the past and they do not have a way to mass store heating oil. In fact, this is why Besche (and the others) try to weasel customers into buying the so-called "locked in price" a few months ago when the price of a barrel was way over $100 a barrel. Anyone that done that simply got ripped-off. Might I reiterate... they were "offered to buy into" this lock-in. I didn't.

They delivery my oil on a scheduled time (at their discretion), supposedly based on past consumption of the season. You're welcome to call any of them for reference (instead of posting long nonsense spew) and you'll find that the oil they are delivering is oil that was recently acquired. (remember the lock-in?) There is no southern maryland storage for heating oil. They deliver daily, at all hours of the day and night. Now if the national price had gone up to $99 a barrel over the weekend, you can take it to the bank that the delivery I just received would be matching that rise in cost!

Also, during winter months, Oil heat has to consume just as much as vehicles because with cold weather, home furnaces are running nearly 24/7. Vehicles are not. I don't have statics and maybe someone took a survey, but if they claim to store heating oil, I'll betcha they'll change that story if the Wapo investigates.

Thats not gouging (at least not much) Heating Oil is the same as Diesel with a dye added. Besides the additional road taxes you pay, Diesel and Heating Oil should be close.

Well, I certainly wanted discussion, but just wtf are you talking about? Please visit this website and you might be enlightened about gas, heating oil and diesel: Facts On Fuel

Just paid the same from Burchoil. $2.49 must be the going rate. I thought it was great as I hadn't checked on prices since the $5.00 a Gal. scare last summer.

Yes, it is certainly better than $5 a gallon, but that doesn't sit too well with me. I just seen on pbs (TV) that the average price of gas today is around $1.65 a gallon. It's been that way for a few weeks.

I am afraid that these distributorships are ripping people off... and until investigations reveal and people stand up to them, they'll continue. I am afraid $2.49 a gallon is WAY too much when the average should be commensurate to auto fuel price. Please read the link above carefully.

 

[bohman]

Well, with your response, I would almost think you have a stake in the distributorship. I spoke with a few distributors in the past and they do not have a way to mass store heating oil. In fact, this is why Besche (and the others) try to weasel customers into buying the so-called "locked in price" a few months ago when the price of a barrel was way over $100 a barrel. Anyone that done that simply got ripped-off. Might I reiterate... they were "offered to buy into" this lock-in. I didn't.

They delivery my oil on a scheduled time (at their discretion), supposedly based on past consumption of the season. You're welcome to call any of them for reference (instead of posting long nonsense spew) and you'll find that the oil they are delivering is oil that was recently acquired. (remember the lock-in?) There is no southern maryland storage for heating oil. They deliver daily, at all hours of the day and night. Now if the national price had gone up to $99 a barrel over the weekend, you can take it to the bank that the delivery I just received would be matching that rise in cost!

Also, during winter months, Oil heat has to consume just as much as vehicles because with cold weather, home furnaces are running nearly 24/7. Vehicles are not. I don't have statics and maybe someone took a survey, but if they claim to store heating oil, I'll betcha they'll change that story if the Wapo investigates.



Well, I certainly wanted discussion, but just wtf are you talking about? Please visit this website and you might be enlightened about gas, heating oil and diesel: Facts On Fuel



Yes, it is certainly better than $5 a gallon, but that doesn't sit too well with me. I just seen on pbs (TV) that the average price of gas today is around $1.65 a gallon. It's been that way for a few weeks.

I am afraid that these distributorships are ripping people off... and until investigations reveal and people stand up to them, they'll continue. I am afraid $2.49 a gallon is WAY too much when the average should be commensurate to auto fuel price. Please read the link above carefully.

I guess my iggy list will have to grow by one more. You posted a question, got some genuine, thoughtful responses (whether they were right or not, I have no idea) and spat in their faces for it. If you already knew the ####ing answer, why post the question? What a dingleberry.

As for whether heating oil & diesel are similar stuff - yes, they are. Your nose ought to be able to tell you that, if you've ever filled the tank on a diesel vehicle. You're a real "genius" for thinking that your heating oil should be the same price as gas.

 

[BS Gal]

We're paying $1 a month for oil. Besche overcharged us so much during the past few years that we had quite the credit. We could ask for our $ back, I guess, but for now, it's a buck a month. We aren't complaining yet. We aren't using much oil since we got a new oil furnace and a new heat pump/a.c. That has saved us a TON of oil $.

 

[County_Boy]

Hey Doo Doo Brain!

The Good news is that if you don't think $2.49 per gal. is a fair price
You don't have to pay it !!

It is a voluntary choice you make, You can cut wood or whatever or just
freeze Your AZZ off for all I care.

 

[Tilted]

The $2.49 price is pretty much in line with the average retail price in the PADD 1B region (i.e. MD, DE, DC,NJ,NY,PA).

The retail price spread between heating oil and gasoline does tend to fluctuate, historically. That’s because, at any given time, the retail price of each is more closely tied to its own futures contract price, than it is to their common factor’s price (i.e. crude oil). Heating oil (RHO) doesn’t always trade on precisely the same factors as gasoline (RBO), so sometimes their prices diverge.

Heating oil demand is hard to predict because it depends, to a large degree, on the weather, which is obviously hard to know ahead of time. That reality makes the efficient control of its inventory levels more difficult than it is for gasoline. Different inventory levels can cause spreads in the futures prices. Additionally, heating oil contracts are often used to hedge jet fuel costs. For those and other reasons, they don’t always move in lock step with contract gasoline prices.

All that having been said, we are currently seeing an unusually high premium for residential heating oil prices versus gasoline pump prices. That’s the result of (1) a spread in their futures prices that is a little high, and (2) unusually (i.e. historically) high retail margins. The question is what is causing those phenomena.

For the most part, the reported stocks of the two products doesn’t support the wholesale spread between the two. It’s been said that the fear of a colder winter has provided some support for falling heating oil contract prices, while there hasn’t been as much corresponding support for gas contracts. It’s hard to gauge to what extent that is true. For whatever reason though, gas futures outpaced oil to the downside, while heating oil futures did not. That is starting to equalize, but hasn’t completely yet.

The more intriguing aspect of heating oil prices is the high retail margins. Residential heating oil margins in our region had averaged about $0.68 / gallon over the last 5 years, moving up only slightly. Indeed, they’ve only moved up about $0.20 in the last 15 years. For the last three months they’re over a dollar. That sharp increase, in a commodity driven market which has seen fairly stable margins, and in a deflationary environment, is somewhat surprising.

How much of that is the retailers passing along the cost of bad (in hindsight) hedging decisions, and how much is taking advantage of a consumer base that not too long ago was expecting much higher prices, is hard to say. I tend to think it’s the former, but certainly can’t rule out the later. A need for better cash flow, as a result of some of the customer credits on their books that have been alluded to, may also be playing a small role.

Please don’t get me wrong, I’m not complaining about any of it - just pointing out what is, or may be, going on. It’s a free market, and as long as retailers aren’t colluding to maintain a price, I don’t see anything wrong with it.

 

[Tilted]

Petroleum inventories just released. As fate would have it, the most notable number was the distillate fuel oil (heating oil and diesel) inventory. Its build was much greater than expected - up 6.3 million barrels.

That should pull heating oil prices down some - RHO futures are down about 6 cents already.

 

[kom526]

Well, with your response, I would almost think you have a stake in the distributorship. I spoke with a few distributors in the past and they do not have a way to mass store heating oil.

Larry purchases LARGE amounts of fuel for his business and as luck would have it, he usually purchases right before a HUGE drop in crude prices. To get the best price on oil, PM Larry and find out when he is topping off his tanks, wait a week or so then place your order. You should save a 3-5 cents per gallon.

 

[terbear1225]

Larry purchases LARGE amounts of fuel for his business and as luck would have it, he usually purchases right before a HUGE drop in crude prices. To get the best price on oil, PM Larry and find out when he is topping off his tanks, wait a week or so then place your order. You should save a 3-5 cents per gallon.

good to know.

so larry, when are you topping off your tanks?

 

[Larry Gude]

Larry purchases LARGE amounts of fuel for his business and as luck would have it, he usually purchases right before a HUGE drop in crude prices. To get the best price on oil, PM Larry and find out when he is topping off his tanks, wait a week or so then place your order. You should save a 3-5 cents per gallon.

As a community service, I usually try to announce the coming decline! I was gonna do it this AM, but, oil has dropped $.05 a gallon. That's $350 I saved by doing nothing. Now, the trick is to buy before that saved $350 becomes a lost $700 or more!!

 

[Larry Gude]

Petroleum inventories just released. As fate would have it, the most notable number was the distillate fuel oil (heating oil and diesel) inventory. Its build was much greater than expected - up 6.3 million barrels.

That should pull heating oil prices down some - RHO futures are down about 6 cents already.

Damn right.

 

[DooDoo1402]

Petroleum inventories just released. As fate would have it, the most notable number was the distillate fuel oil (heating oil and diesel) inventory. Its build was much greater than expected - up 6.3 million barrels.

That should pull heating oil prices down some - RHO futures are down about 6 cents already.

Thanks Tilted... your responses were interesting and civilized...

 

[bohman]

Since you wanted to get technical, or just wanted to be an a$$ (not sure). The only difference between Fuel Oil, Off-Road Diesel and On-Road Diesel is the Taxes you pay for it, and the Dyes added for easy identification. There maybe a negligible octane difference

Thank you for posting that. I didn't have the energy to get into all that with the OP, given the attitude already displayed.

 

[Tilted]

Thats not gouging (at least not much) Heating Oil is the same as Diesel with a dye added. Besides the additional road taxes you pay, Diesel and Heating Oil should be close.

Since you wanted to get technical, or just wanted to be an a$$ (not sure). The only difference between Fuel Oil, Off-Road Diesel and On-Road Diesel is the Taxes you pay for it, and the Dyes added for easy identification. There maybe a negligible octane difference

For the purposes of this conversation, your original statement was correct. Heating oil and diesel are essentially the same and can generally be interchanged, except as regards the law.

I just want to make one additional point though. Diesel, used for certain purposes such as on-road, has to meet different standards for sulfur content than heating oil does. So, one other technical difference is that diesel generally has less sulfur in it than heating oil does.

As far as pricing goes, the spot prices of the two are usually almost identical (within fractions of a cent per gallon).