Posted in: Default,
by Patrick DeHaan on Oct 12, 2009 12:10 PM
With winter across the U.S. and Canada fast approaching, prices of heavy oils, used to heat homes across North America, have steadily increased the past week.
The cost for a gallon of diesel fuel or heating oil recently became more expensive than a gallon of gasoline, a term I like to call "the Fall flip". Diesel and heating oil prices become more expensive than gasoline in the colder months because demand for gasoline falls while demand for heavy oils rise. During Summer months, gasoline is typically more expensive as demand is high while diesel and heating oil demand is lower. When the cost of heating oil and diesel becomes more expensive than gasoline, the "flip" has occurred.
It is also important to note that many meteorologists that I watch have pointed to colder than average weather earlier in the Winter. This could cause higher demand for heavy oils, resulting in higher fuel prices as supplies of heating oils drop.
Some good news for consumers though remains the uncertain economic future. Economies in North America have yet to show definitive signs of recovery, tempering fuel prices that are being pulled down (because of higher than average inventories) and up (because of a weaker dollar and small signs of an economic recovery). For the short term (next few weeks) it seems that prices are more likely to continue to rise, so if you're debating when to fill your reserves for this winter, you might be smart not to wait any longer.