Latest Update on Energy Prices
On October 5, OPEC announced it was slashing production by two million barrels a day. Within just three days, our suppliers increased the cost of heating oil by 70 cents per gallon. That’s right, 70 cents per gallon.
This is not just impacting heating oil. Expect natural gas, electricity, gasoline, and propane to move higher too. Of course, this is not simply about supply and demand. We’ve learned that when prices move this far this fast, you can always see the impact of Wall Street firms that jump to take advantage of the momentum to make a quick buck. (Or should we say millions of bucks?) It frustrates the heck out of us.
Of course, things can turn around just as quickly. We saw prices spike in spring only to drop by over a dollar in summer. There are just too many variables to know where things will go from here.
Here are a few things to bear in mind:
- We hate high prices and volatility just as much as you do. It hurts our customers, hurts our company, and makes planning very difficult.
- This year, supply issues could become problematic. While we have excellent relationships with our suppliers, it is imperative that you go on (or stay on) automatic delivery. This way, if we go on “allocation” from suppliers, have drivers out sick because of COVID, or face severe weather, we can manage capacity better and keep you warm.
- Don’t be surprised by big bills. If you’d like to know how much you used last year so you can project this year’s bills more accurately, call us. This is going to be painful, but it will be helpful to be able to plan for it.
- If you are having trouble keeping up with your payments, it is critical that you call us as soon as you realize there’s an issue. We can work with you but only if you communicate with us early.
I will try to keep you informed as events unfold. There are many things we can’t control, but we will always prioritize our existing customers over new ones. We will go the extra mile to keep you safe and warm. And we will be there when you need us.
Shocking Spike in Fuel Prices
Unsurprisingly, we’ve been getting many calls around two connected issues: the surge in fuel prices and supply concerns. People are astounded by how much prices have risen and how fast. So are we. They are also concerned that there will be interruptions in supply that will cause them to run out of fuel.
The Russian invasion of Ukraine shocked energy markets, sending crude oil to record territory.
To give you a sense of how this affects your heating oil price, in early March, we received notice at night from our suppliers that their prices were going up 20 cents per gallon the next day. The next day, prices went up three more times—a total of 60 cents in just 24 hours. Prices continued to surge—a total of $1.25 in one week. Normally, they might change 5 cents in a week.
What’s Coming Next?
We don’t know where things will go from here. One thing we can tell you is that we hate this as much as you do. Some people are under the misconception that when prices rise, we make more money. The opposite is true. People cut back usage. They have trouble paying their bills, and our receivables skyrocket. Meanwhile, we must pay our suppliers in just ten days. We must borrow much more from the bank. It is an awful mess for everyone.
One thing you can count on is that we will not let you run out. We have been in business for many years and have very strong relationships with suppliers and financial institutions. We are already getting calls from customers who are with other companies that can’t say the same. These customers are unable to get deliveries for 20 days out. You don’t have to worry about that with us.
If you are having trouble paying your bill, talk to us before it becomes a problem. Many times, we can work out something to give you more time, especially if you’ve been with us a while. We can also set you up on a monthly payment plan.
Nothing will make us happier than when prices start dropping. Until then, trust us to look out for you, and let’s pray for the people of Ukraine.
Ken Williams, President
Scott Williams, Inc.