The price of #2 heating oil

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Moving Forward
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The price of #2 heating oil

Boy did I get hit with some sticker shock today... for some #2 heating oil in the Augusta area.

When I called around today to get some prices, I was rather shocked to hear from multiple suppliers the price had jumped up 40+ cents per gallon since just 20 days ago. Although the law of supply and demand clearly applies, and it has been very very cold lately, it just seems like that big of a jump is leaning toward price gouging. Are other areas around the state seeing the same kind of price hike for #2?

Economike
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Moving Forward -

Moving Forward -

If you believe that "price gouging" happens in a competitive market like the Augusta area, then yes, it's probably price gouging.

Melvin Udall
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ALL THINGS considered, I've

ALL THINGS considered, I've been more than happy to have a contract in place and auto delivery.

You can roll the dice, but I'd rather do it on other things, not basics like heat and hot water.

And contracting for propane has been of great benefit.

johnw
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Price gouging ? Ther a

Price gouging ? There a several factors that drive the price of oil and propane.The first and most obvious is supply and demand,while supply at the moment is adequate the demand is very high.The Lp supply is starting to bottle neck at the rail heads so don’t be surprised to see some shortages .The second and more basic underlying fact is the cost of operations? The shortage of drivers has driven driver wages through the roof,the cost of trucks and maintakning them has increased exponentially,servicemen are at a premium.There is an ever increasing administrative burden to meet all of the government regulations and guidelines........ AND the heating business is seasonal in many ways .....small companies who have nothing to offer but a low price and oil is their only source of revenue push retail prices down in the non heating months.....and when demand is up everyone is trying to make up for the cost of operating in the non heating months by making more margin......it’s not gouging it’s simple economics for a seasonal business.Over ten years ago Gray,,Gray andGray an accounting firm with much expertise in the petroleum business told retails they needed an average margin of $.50 per gallon to survive and prosper.....In Maine last summer the average margin was less that $.35 in many markets......competition for those scarce summertime gallons..... ....bet you could rent a beach front cottage for almost nothing right now......are they price gouging in the tourist season?

Moving Forward
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Great post, johnw, thank you

Great post, johnw, thank you for the details!

johnw
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For all those oil haters ...

For all those oil haters ... from Vermont Fuel Dealers Association
Keeping the Lights On Thank goodness for fuel oil which is helping provide both heat and power. Natural gas, hydro, coal, solar, and wind just can't keep up with demand for electricity caused by the frigid temperatures. As of Thursday night, fuel oil is ensuring the grid has enough power, according to ISO-NE. The sustained cold is requiring round-the-clock usage of oil-fired generators by electric utilities. Due to a shortage of natural gas, the wholesale spot price for power has jumped as high as 30-cents per kWh, according to ISO-NE.

Across the northeast, natural gas utilities and are unable to supply all of their customers. In many cases, interruptible load natural gas customers were forced to shut off their piped gas and switch to heating oil.

That last sentence is another reason why oil prices spike..... natural gas just cuts customer off usually big user like factories, schools and other industrial user who have no choice but to fall back on oil ....

pmconusa
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Is there oil available? Yes.

Is there oil available? Yes. Is it costing more than $0.40 more cents per gallon to produce? No. What you are seeing is the consequence of monopoly practice permitted and encouraged by our government who is supported in its policies by the very people who profit from the practice of monopolies. If the government had established a policy to tax away the excess profits of corporations they would not engage in the practice and the price for your heating oil or anything else for that matter would not exceed the cost to produce it plus a return on investment. Competition would tend to minimize the latter so long as the supply was adequate to meet the quantity needs. The problem is that with material or items that do not reproduce themselves the cost to produce it continues to rise as the energy needed to produce it continues to increase.

Man is the only animal that requires exchange (money) in order to survive and the others survive on what nature provides each year in the form of food. Man has been able to augment nature in the quantity of food nature produces but it is not equally distributed which is why people from countries where it is not produced is sufficient quantities are leaving in droves to where it is or fighting those who are taking a bigger share. We have reached the limit in output per acre by genetic engineering, irrigation and fertilization of nearly every crop type and have resorted to subsidies in order to produce the most energy containing crops (Wheat and Corn).

When the tractor began replacing the horse, we stopped breeding horses. When machines, replaced people we did not stop adding to the population, in fact most encouraged it. We are currently witnessing the effects of that foolhardy policy.

JackStrawFromWichita
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Crude futures have been

Crude futures have been moving up and recently hit a 3-year high so it’s not all “gouging”. Gasoline has gone up too.

I switched over to natural gas over the summer and so far, so good.

johnw
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pmconusa ... do you have any

pmconusa ... do you have any idea what it cost to store, move and process a gallon of oil at a retail level,maintain facilities and make a profit??What it costs to produce a gallon of oil in Saudi Arabia or West Texas is out of local retailers control...... if the spot price in Portland is 2.22 a gallon retailers are going to add on accordingly........Simple fact there's a lot of people with their finger in the pie between the well head and your fill pipe.....and none of them are in it for the exercise.....

Tom C
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Can't even get the stuff

Can't even get the stuff delivered. Ordered last week, haven't seen the driver yet.

Buying off-road at the pump for $2.49 and filling 5 gallon cans.

johnw
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TomC companies are swamped

TomC companies are swamped due to the extreme cold and lack or drivers , bad weather and mechanical issues ....Things are backing up as the snow gets deeper, people need to be aware that unplowed driveways and no path to their fills just slows down the deliveries.
AND there is an absolute ton of people who wait until their tank is registering near empty to order and expecting an immediate delivery...NOT happening.
Most oil companies are delivering to critical facilities, hospitals, nursing homes etc. first autos next and will call as they are put on the list.........

Helpful info: The average 275 vertical oil tank has 240-245 usable gallons capacity each eight of a tank represents about 30 gallons of fuel.On a regular glass fuel gauge you should read it at the top of the float... Most gauges are reasonably accurate. The average home is using between 5-8 gallons per day of fuel in this kind of weather.....

LP If you are a will call LP customer at 20% in extreme cold your appliances may not work according to how much BTU demand you have...... call be fore you get close I suggest calling when you are at no less that 50%.
Keep your tank clear of snow, snow insulates LP tanks and prevents efficient "boil" .

This from VFDA January Degree Days as measured in Montpelier
Observed: 196
Normal: 142
Last Year: 119
38% MORE than normal 65% MORE than last year

It's 65% colder than the same time last year ...demand is UP it means the average customer will use their fuel much faster than last year.

Smart things to do IF you are a will call and normally don't fill your tank..... if you can find the money to fill your tank when they do deliver...... Next year think about getting on a budget plan with your local oil company and being on automatic delivery ...you'll move to the front of the line This applies to both P and heating fuels.

And last thing when that delivery driver shows up don't give him any shit..... these guys and girls are the unsung heroes of the New England winter, if you are hauling fuel in cans you can imagine life without them.

pmconusa
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johnw: Saudi Arabia and its

johnw: Saudi Arabia and its partners in OPEC are exercising monopoly power and dictate the price consumers will pay by adding to or withholding product from the market place. Its actual cost of production and delivery to the terminals at Ras Tanura and Juaymah is far less than the price charged to collect it and deliver it to the world's refineries. When I retired in 1985 the companies cost to deliver that oil to the terminal was under $3.50 per barrel. Our cost at the refinery for gasoline was $0.03 per gallon. In order to cover the gas station operators cost and profit they were allowed to sell it at $0.11. When I last visited in 2015 gasoline was selling for $0.31 per gallon a reflection of the fact the cost of extraction and refining was increasing due to the decreasing value of the dollar. OPEC will keep the price of crude low enough to discourage its production elsewhere and thus lose market share but high enough so as not to cause economic chaos which they tested recently, driving the price to well over $100 per barrel. The problem they have is long term in that eventually their reserves will dwindle while their own needs continue to increase because no more oil is being produced by nature and they have nearly exhausted the possible sources of undiscovered oil. They still have enormous reserves of gas but the cost of extraction would not make it profitable where other gas sources can produce it for less. When I retired they were drilling test wells for this gas to determine its extent for future exploitation. Each well was costing upwards of $30 million because of the depth (15,000 feet) of the reserves.

Green-ee
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Another factor is that

Another factor is that heating oil and diesel fuel are now identical before road use taxes. Diesel fuel is now north of $3 a gallon. As third world economies improve more diesel fuel is needed and the price goes up.
Few Americans heat with oil. Go west, south, or even north to Canada and LP, natural gas and electric is the common source of heat. It's the diesel market that drives the prices higher more than the cold winter in the northeast.

Tom C
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I had a quarter tank left

I had a quarter tank left about 10 days ago, and ordered fuel. I thought that was plenty - but NOW they are saying order when you have half a tank left.

NOW they tell me

Bitter cold made me nervous, and it was getting very low, so I've been adding fuel by hand.

Promised fuel today - no fuel. I've cleared out a beautiful path to my fill. Meanwhile, I've thrown in 50 gallons by hand the last few days, and will probably throw in another 30 gallons this weekend. The gauge on the tank is rising, so I'm doing better than just keeping up.

The punch line - off-road is about 40-50 cents a gallon CHEAPER here than delivered #2 HHO. But cripes, my arms hurt.

Hey, it's Maine. Suck it up. Cripes, when I first came to Maine I had to build my own outhouse. This indoor plumbing is glorious.

At another location - I have about 160-200 gallons left, so I ordered fuel TODAY. I'll bet they don't even log the order.

Calling around, no one is taking new customers. One company said they'd take new customers in March.

I'll have arms like Arnold Schwarzenegger by then.

Ugenetoo
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I've never been sorry to have

I've never been sorry to have switched to pellets.

Al Amoling
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I just got a delivery

I just got a delivery yesterday. I'm on automatic fill but my arrangement is to for them to have enough money to take from my account on delivery and in return I get 10% discount,

lucky
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We're on auto fill also. We

We're on auto fill also. We got a delivery day before yesterday, the morning after the storm. Kennebec had gone out early to shovel so the path to the fill pipe was clear. We get a 10% discount if we pay within 10 days. The price of the oil was comparable to current heating oil prices throughout the state.
My thoughts are conflicted on recent oil delivery issues. While I feel compassion for those who are having problems getting oil, I also wonder why people don't establish themselves with a company and arrange for auto refill. I know people want to shop around for the best price, but if you do that don't be surprised if fuel dealers take care of their established customers first.

johnw
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Lucky for many it’s about

Lucky for many it’s about financial discipline. They won’t plan for evitable cold here in the northeast,but have money for lots of nonesentials, like big smartphone plans,ATV and tattoos......you are spot on.
Most every oil company offers a budget plan with different options.......but the main benefit is being on auto delivery.

pmconusa
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All crude oil is not alike

All crude oil is not alike and contains varying amounts of different compounds and minerals which were part of the vegetation that ultimately decomposed under pressure to create the liquid crude. Refining removes these at varying temperatures to produce the products we use in various ways, including direct burning either for its heat to keep us warm or in the form of energy in internal combustion engines. Shaybah, among other fields in Saudi Arabia contain a crude that has the fewest of the incombustible byproducts and was used in the diesel trucks that hauled in the supplies when the wells were being drilled their. It had a bit of paraffin but even that will become liquid and burn when the temperature is high enough.

The purpose of this little dissertation is to illustrate that ultimately, what we now consider pollutants including carbon dioxide will be released to the atmosphere whether we burn crude directly or its various components. Europeans and other intelligent consumers get 40 or miles to the gallon from diesel fuel and their internal combustion engines are designed for it. Because we want to be able to drive at 100 miles an hour in a two ton vehicle we use only part of the volatility of the crude that enables that excess. Making it prohibitively expensive by taxing it to death, Europeans, on average use less per person and therefore release less pollutants into the atmosphere.

In the event you haven't taken cognizance of the fact, carbon dioxide is not a pollutant but an essential part of the life process for the trees and plant life essential also to human life. The atmosphere contains less than 1% of free carbon dioxide and is replenished by the burning of hydrocarbon material such as trees, coal, fuel oil and gas. If we immediately stopped burning these hydrocarbons and converted to other forms of energy, plant life would ultimately consume what carbon dioxide exists in the atmosphere and there would be no more plant life and without plant life, all living creatures would ultimately disappear. It will eventually anyhow because we cannot stop the consumption of what is reproducible and our practice of continually increasing the population only reduces the time of its occurrence.

It can easily be demonstrated that the disappearance of their food supply has been the demise of many species in the past. Man will be no exception.

Al Amoling
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I might add that our oil man

I might add that our oil man delivered about an hour before my plow guy showed up to provide a path to fill pipe.

Toolsmith
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Plants take in carbon dioxide

Plants take in carbon dioxide and release oxygen.
Animals take in oxygen and release carbon dioxide.

How is it possible to run out of either?

"Animals" includes humans, of course. And there are a lot of us...

Tom C
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I just got a delivery

I just got a delivery yesterday. I'm on automatic fill but my arrangement is to for them to have enough money to take from my account on delivery and in return I get 10% discount,

One of the complaints about automatic delivery is that fuel companies deliver when the prices are the highest. Years ago I had automatic delivery, and I was paying thousands of dollars a year. I went over my bills, and I saw a bill for 275 gallons for my 275 tank. The max capacity of that tank is 250-260 gallons. I called and complained, and they refunded me the 15 gallons, but I switched companies, and my total bill went down by more than 25%. They were gouging me on price AND quantity. Based on that experience, I have no faith in the abilities of these companies to treat me fairly - I check the tank level after its filled, and check the ticket, including making sure it was zeroed out. Also, who remembers the prepaid oil companies that went out of business during winters past, when they got caught between contractural pricing and oil price increases? The customer was out a lot of money in those cases.

After that, I settled on a local company years ago, until it was sold out. I actually ended up with a new company started by the guy who started the first company. His service and prices were always excellent. However, he sold out his new company (I think to the people that bought his old company,) and the service has been going downhill in a hurry.

For many years, now, I try to stay with the same companies out of loyalty and familiarity, but that loyalty should go both ways.

A billion years ago, when I ran low on fuel, I'd just hang out on the street until one of those "cash only" oil trucks went by. I'd flag him down, give the guy a handful of twenties, and he's give me that much oil.

Now all the little guys are gone.

If this isn't fixed soon, I will switch companies next spring, and go on an auto plan, especially if I can get a prompt pay or prepayment discount.

Until then, I'll live like our pioneers!

johnw
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TomC ....being on auto so oil

TomC ....being on auto so oil companies can charge a higher price is just plain wrong, If you are on auto you are on one of two systems.Julian Day which is that you have deliveries scheduled on a set number of day ,say every 21 days .Or on the degree day system which is based on the number of degree days that accumulate,the easiest explanation without pitting all the math here is ,the colder it gets the closer together your deliveries are.....the warmer it gets the farther apart .....The reason that oil companies want people on auto is for efficiency and maximizing delivered gallons per hour that a driver works.
If you think that somewhere in any oil company office there are people sitting around calculating when the optimum time to deliver at the highest price ......think again.....

Al Amoling
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Tom C

Tom C
The rest of the story is that when I installed a generator to cover for my wife's COPD(O2) needs, they installed the propane line and offer me a rent-free tank. I'm sure there are gouging dealers but I've been dealing with this family for 20 years now.

Tom C
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Our church was on auto fill -

Our church was on auto fill - and last Sunday morning when I walked into the building, the sanctuary was 14 degrees.

Even auto-fill doesn't help if the drivers have more tickets than they can deliver, especially when the degree days suddenly goes through the roof.

Green-ee
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I've got close to 900 gallons

I've got close to 900 gallons when everything is filled in August. A 12 volt transfer pump and a 55 gallon drum allows me to get through the winter on fuel that was purchased and delivered when things were more competitive. If you have room in your basement you can have three 275 gallon tanks all plumbed together.

Ugenetoo
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Green-ee gets it.

Green-ee gets it.
I have enough pellets in one ton bulk bags to heat my home for two years.

pmconusa
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Toolsmith: Animals take in

Toolsmith: Animals take in air which contains both oxygen and carbon dioxide as well as other gases and even solids. Animals use the oxygen to burn the fuel (food) needed for survival and return the carbon dioxide and other gases contained in air back into the atmosphere. The only thing that makes carbon dioxide is the burning of fossil fuels which requires oxygen to combine with the carbon compounds that make up plant life through the process of photosynthesis.

Oxygen is absorbed by other elements such as iron, aluminum, silver, which when in free form combine to form oxides such as iron oxide or rust. This process will continue until all of the oxygen in the atmosphere is used up because there is nothing that produces oxygen just as there is nothing that is producing more iron or silver or any other element in nature. We have a tendency to see things only in the perspective of our life span which is infinitesimal in comparison to that of nature. We do so at our own peril which unfortunately can now be predicted within the life span of our grandchildren.

Mike G
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Johnw

Johnw

What is reason for shortage of drivers? Do you have to be a boy scout?

johnw
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There is tremendous demand

There is tremendous demand for cdl drivers from all companies who deliver products. The extra restrictions on drivers with hazmat endorsement just adds to it. It’s anationwide problem,the median age of drivers is increasing and less and less young people want to do the job.....Particularly fuel delivery drivers the work is cold,wet, and physically demanding.The pay is really pretty decent ......

Ugenetoo
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Drug tests and lack of

Drug tests and lack of ambition, MikeG.
Who wants to work in sub zero weather, wading snow and dragging a hose to customers that are less than enthused about having to deal with you when one could sit on the couch, watch the soaps and stay high all day.

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