What Causes Fuel Prices To Change?

Written on: December 13, 2021

There isn’t just one reason

home oil pricing oklahomaMany of us have been feeling the pinch as prices for just about everything have gone up. Groceries, gas for the car, clothes, dinner out, and more are all taking bigger bites out of our bank accounts.

Energy prices have also been going up, which presents challenges as we enter the home heating season.

Natural gas costs have increased by more than 150%. Crude oil costs have surpassed $85 per barrel, which is the highest they’ve been since 2014. Propane prices are at their greatest level in seven years. Electricity costs are also on the rise, owing to the industry’s heavy usage of natural gas-fired power plants.

Thanks to long-standing, strong relationships with our vendors and our large fuel storage capacity, we at Pitmon are doing everything possible to minimize fuel price increases for our customers. That’s because higher fuel prices hurt us as well.

When prices go up, we don’t make more money. We lose money.

That may be surprising, but it’s like how it is with your local grocery store. When the cost of foods like coffee, bread, or milk increase, the local store isn’t making more money. Those profits go to the corporate level and Wall Street investors.

When fuel prices go up, customers can have problems paying their bills. They decrease spending and fuel usage as much as possible. We need to draw on our lines of credit more frequently. Our phones ring all day with questions and concerns from customers. The sooner energy costs decline, the happier we will be as well.

What’s behind fuel price spikes?

Fuel costs are determined by a number of concerns and aren’t always straightforward. Because the bulk of energy comes from commodities like oil, everything from weather to geopolitical situations can affect pricing.

One reason is that because to the increased emphasis on electrification in home heating, oil and natural gas drilling has decreased. The incorrect assumption that electricity is better at combating climate change has resulted in the push to electrify homes, which can significantly increase heating costs while decreasing heat efficiency and comfort.

Because of this decrease in drilling, supply is down as demand grows. Natural gas processing not only boosts electricity generation costs, but also propane as a significant amount of propane in the United States comes from natural gas processing.

Get the best prices on propane with reliable delivery! Become a Pitmon customer.