Crude Oil Prices Down Compared to Last Year

By Lauren Wanko

The cold weather is here and winter is quickly approaching. It’s the time of year consumers typically brace for hefty heating bills. The forecast for this season? Experts say it all depends on what’s heating your home.

“If you’re heating your home with natural gas, you’re very lucky. The price of gas probably won’t even spike so you are in very good shape. I can’t say the same for heating oil because heating oil’s tied to crude oil. The price of crude oil isn’t set by us. It’s an international commodity and if it were to go up, your heating oil would go up,” said Monmouth University Professor Roy Nersesian.

Nersesian says over the years, he’s seen a spike in people interested in switching from heating oil to natural gas. Still New Jersey’s current oil price is down compared to the same period last year — $3.89 a gallon versus about $4.15 per gallon last year.

“The 10 percent fall really has to do with the 10 percent fall in crude oil prices,” Nersesian said.

The decreased costs are a welcome relief to fuel company owners.

“The fuel season is shaping up to be a lot better than last year because energy prices are lower,” said Wooley Fuel Company owner Norman Wooley.

PSE&G says since 2009 customers have seen a nearly 40 percent decrease in their annual bills. The company expects residential gas bills to remain stable this winter. Industry leaders credit decreasing natural gas prices with the increased drilling in the Marcellus Shale in Pennsylvania and other states.

“Due to the proximity, we have transportation assets, we have pipeline contracts, we have storage capabilities that allow us to really capitalize on the abundance of natural gas that exists on the Marcellus Shale,” said Kristine Lloyd of PSE&G.

“It’s here in the U.S. we don’t have to beg anyone for natural gas. It’s not like with crude oil. It’s quite the opposite. We are affected by whatever happens in the Middle East and a lot is happening is the Middle East,” said Nersesian.

Some analysts insist consumers should think twice before switching from heating oil to natural gas and the decreasing natural gas prices due to increased drilling in the Marcellus Shale will only be temporary.

“As you look at the increased oil production in places such as formation and some of that is finding its way here as we increase production of oil domestically. A lot of the natural gas that is being developed in the medium to long term will be exported around the world, thereby having natural gas prices more naturally reflect worldwide prices” said Eric DeGesero,
N.J. Fuel Merchants Assn.

Meantime as the chilly temperatures get even chiller, industry leaders say don’t overlook routine maintenance.

“Having a heating professional tune up your heating system annually can save you 5 to 10 percent,” said DeGesero.

Surely a welcome savings to New Jerseyans this winter.