The larger ebbs and flows of economics and politics rarely touch the lives of everyday consumers. However, homeowners feel the direct impact of national struggles and global crises when they get their heating bills.
You may still have the lingering effects of PTSD every time you get your energy bill. It’s enough to see your life flash by and can prompt you to start a GoFundMe fundraiser. When your hard-earned money goes to your bill, you suddenly become willing to throw all of your pride out the window (at the risk of letting cold air in) as you scramble to pay the high price.
As oil prices continue to rise, it begs the question: what is going on here? After oil prices spike earlier in the year and then drop over the summer, the costs associated with oil are rising again. Let’s discuss some of the reasons why you continue to see dramatic fluctuations.
Why Is Oil So Expensive Right Now?
As we head into the winter, there are many different reasons that oil is becoming pricier than ever before.
- The Pandemic Started It
The global pandemic kicked things off in 2020 with a wild swing in oil prices. After dropping just below $0 a barrel for a minute (thanks to Covid-19 lockdowns and quarantines), the price has only gone up in the last two years. Supply chains remain strained, and countless factors (including some on this list) have taken place in the wake of the global crisis. This has only exacerbated the instability created by the pandemic.
- Europe Is Looking Elsewhere for Fuel
The other elephant in the room when it comes to oil costs is the fact that Europe is leaning on other oil sources. This is in an attempt to deviate from its dependency on Russian fossil fuels. Russia was responsible for roughly one in ten barrels of oil on the global market before it sparked a war by invading Ukraine earlier in the year. As Europe has put sanctions in place, its countries have begun to look elsewhere to replace their fuel supplies, drawing on the rest of the world’s stock in the process.
- OPEC Is Producing Less Again
OPEC is another major player in the oil industry. The economic alliance recently announced that it’s slashing production once again. There are multiple reasons put forward for this sudden reduction in supply. Those looking to get more affordable fuel for their homes this winter will feel the impact through higher prices as they fill their fuel tanks and consider moving to Aruba, where the heat is free.
- Inflation and a Weak Dollar Aren’t Helping
Inflation and a weak dollar are also eating away at the buying power of consumers. Of course, this isn’t news to most Americans, but the weather was warm throughout the current inflationary stretch — until now. As the cold weather arrives, a weak dollar has the natural impact of making oil even more expensive. As a result, homeowners must now scrape together enough to pay for fuel as they consider adopting their kids’ Power Wheels to get to work each day.
Are There Good Alternatives to Oil Right Now?
The unfolding oil crisis has many looking for alternative fuel sources that they can tap into to offset some of the rising prices. The options, though, are a mixed bag and there really is not a one size fit all solution, even if that is what the electric company is telling you.
On the one hand, common options like natural gas and electricity still have some major caveats. For instance, many simply don’t have access to natural gas — those who opt for electricity become 100% dependent on the fractured power grid, too.
On the other hand, propane remains one of the only alternative fuel sources with any promise. This is because the natural gas and petroleum byproduct can be delivered at any time to nearly any location (as opposed to the need to access gas and power lines).
As far as costs are concerned, it’s estimated that propane will only rise 5% this year (less than inflation) compared to 10% for electricity and nearly 30% for natural gas and oil.
Leaning on Propane This Year
The positive outlook for propane has many wondering if they can make the shift. Fortunately, you don’t need to ditch other heat sources to tap into the power of propane. Installing a propane insert or using a propane space heater can help cut costs, so you don’t have to resort to wearing a parka in the house.