Our low price isn't just a one-time deal!
The bombing of a Saudi Arabian oil facility on Sept. 14 has caused a short-term panic in the wholesale oil market. Half of the Saudi daily production has been shut down, and it will take many weeks to repair the damage. Wholesale prices jumped 10-20 cents on Monday, Sept. 16 as a result. The expectations in futures markets are these price levels won't last.
Wholesalers that have to buy at today’s high prices will not purchase in large quantity, because they expect to be able to buy more cheaply in the future. This is called a “backward” market, which occurs when the current “spot” price is higher than the futures price. A backward market doesn't encourage wholesale suppliers to build supply for the winter and this makes it more likely we'll see short-term weather-induced price spikes later this fall or winter. Being a member of our oil buying group can help protect you from the after effects of a price spike when dealers are reluctant to cut their prices even though the market has fallen back significantly.
Before Sept. 14, the Green Energy Consumers daily heating oil price was running about 20-25 cents less than this time last year. We're still about 10 cents less than where we were at this time last year.
Typically our price differential is smallest during the summer months due to long-established pricing patterns used by heating oil dealers. Even the highest margin dealers tend to keep their prices low compared to the wholesale cost this time of year (when only 1% of all heating oil is delivered, by the way). They do this to try to keep any of their customers who might shop around before signing another year's service contract. This summer was our best in pricing terms since 2008-09 when our price started in July at $4.50 and bottomed out at $1.20 in February.
While some dealers play the narrow-margin-high-volume approach to their business all year round, most dealers tend to increase their margins as cooler weather arrives and consumers shop less and rely on the choices made during the summer when they thought they had the dealer with the best price. Our program is often somewhere above the lowest price dealers except during the coldest winter months, when many of the lowest cost dealers are unable to keep up with demand. Meanwhile, our members are getting discounted oil from dependable dealers that are dedicated to serving all their customers all year round.
Now is a good time to arrange for a tune-up as dealers often have technicians they need to keep active. If you haven't had a tune-up and had 5 or more deliveries since your last one, it is time to get it done. While the long-standing recommendation has always been to get an annual tune-up, the low sulfur and increasing bio-diesel percentages in all heating oil make for less soot and gunk to be cleaned. So we figure once you've used 800 gallons or so, it is a good time to get your system cleaned.
How do our prices compare?
Massachusetts' latest monthly price survey of full-service dealers, on Tuesday September 10 documented an average price per gallon of $2.97, with a high price of $4.60 and a low of $2.25. The average prompt-pay price for our members in Massachusetts that day was $2.60, for savings of 37 cents per gallon on average. The last year Green Energy Consumer members saw savings this significant during the summer was in 2008 when the Great Recession was wracking commodity futures markets, and prices were falling from over $4.00 per gallon in July to $1.40 by February of 2009.
Rhode Island's latest weekly survey price, on Monday, August 19, was $2.75, with a high price of $3.93 and a low of $2.14 The average prompt-pay price for our members in Rhode Island that day was $2.35, for savings of 40 cents per gallon.
And in New Hampshire, the survey for Tuesday, July 2, was $2.86, while our average prompt-pay price there was $2.54, for a savings of 32 cents per gallon.