EnergyMiser101

Why Is Heating Oil More Expensive Than Gasoline?

     I had my book-club partners over for our monthly get-together last week. Although it was cold and windy outside, the sun flooded through the windows of my dining room and warmed our bodies and our spirits. In that toasty, cozy atmosphere, surrounded by good friends, the conversation naturally turned to--the price of heating oil.

     Why, asked Karen, is heating oil more expensive than gasoline? With gasoline prices below $2 a gallon, the retail price of home heating oil in the Northeast is about a dollar more expensive. It doesn't make any sense, Karen said.

     I had to admit I was stumped for a good answer, so I did a little research.

Gasoline Slump May Ring In the New Year

    The oil market looks so weak due to the global recession that we may all enjoy even lower gasoline prices when we head to holiday parties during the next couple of weeks. OPEC, the oil cartel that includes Saudi Arabia and other major oil producers, agreed on Wednesday to sharply cut its oil production in the hope of shoring up prices.

    But oil prices on the futures market responded almost immediately by tanking on Wednesday afternoon. This suggests that when it comes to oil/gasoline demand, the ailing economy is a huge wound in the oil market that an OPEC band-aid cannot fix--at least not right now. 

    U.S. oil supply remains well above demand, and that doesn't seem likely to change much as long as the world economy founders and  people like you and I consume less gasoline and turn our thermostats down.

    Inventories of crude oil are so high that this is posing a particular challenge to oil producers.  When oil stocks overflow, oil marketers can tap their excess stocks to meet demand, and a decline in OPEC oil production has little effect on the market. In this case, even if demand rises,  prices won't necessarily follow—at least not right away. So, enjoy this gasoline holiday because it looks like it may be here for a while.

How Long Will Gasoline Stay This Cheap?

    It felt great to fill up our Subaru the other day for just $25.00, and it got me reminiscing about the days when I fueled my Ford Pinto (Yes, it's true, my parents let me buy a Pinto when I was 17!) at the local Dean station for $5.00. I know $25.00 is a far cry from $5.00, but it's a lot better than the nearly $50.00 I had to spend to tank up in July. My most recent trip to the gas station has me wondering how long this gasoline holiday is going to last.

     I wrote  about cheaper gasoline in mid-November (Why Did My Gasoline Get So Cheap?), and the fundamentals that explained the price decline haven't changed—a weaker world economy, less driving,  lower gasoline consumption and, therefore, a less precarious supply/demand balance. All those market factors are just becoming more pronounced as we enter the final stretch of 2008.

How Much Electricity Do Christmas Lights Use?

     As I brought our Christmas lights and ornaments down from the attic today in preparation for decorating the tree, I couldn't help but wonder how much electricity I was going to use on holiday lighting this season.

     Well, unless you're Clark Griswold in National Lampoon's Christmas Vacation and you have your whole house so heavily festooned with lights that you threaten the power supply of the Chicago metropolitan area, you're not going to spend all that much.

     We took our our handy Kill-a-Watt electricity measuring device and came up with a few calculations for my table of electrical costs that you can use to determine how much you'll be spending this season.