Realtors often ask us how to deal with questions they get from clients about energy prices. Will prices rise? Will they fall? Which heating fuel is the least expensive? So we’re going to tell you!
What You Need to Know
Heating oil prices reached a 13-year low just 2 years ago! This was very good news for Pennsylvanians who heat their homes with oil. Prices fell for two primary reasons; domestic supply rose substantially and global demand fell. We are producing more oil at home than at almost any point in our history and the global economy has slowed down its growth, leading to lower demand for fuel. When this happens, prices for oil fall.
When it comes to comparing one fuel source to another, it’s important to know that heating fuel prices typically track each other. There is rarely a period of time where one fuel is out of whack from the other. And so there is rarely a period of time where a homeowner would be saving a lot of money by heating with a different fuel source.
Future Price Outlook
While low prices the past two years were great, it’s more important to understand where prices will be heading in the future. And while we don’t have a crystal ball, we have the next best thing – economic experts and financial forecasters – who can help us predict with confidence where energy prices are going.
Experts are looking at the increase in domestic supply and decrease in global demand as a “new normal,” and they expect prices to stay moderate for the next 3-5 years. This means that prices should stay within the same range as they have been for the last year or two.
As your clients’ real estate expert, it’s important to keep in mind that heating oil prices can vary from company to company. Homeowners should not expect that all heating oil prices they encounter will be exactly the same, but they can have confidence that the prices they will encounter will be competitive and reasonable given then conditions of the energy market.
Does it Make Sense to Switch Fuels?
Homeowners who switch fuels are typically trying to save as much money as they can, and they believe that another fuel source will help them do that. Unfortunately, many homeowners who make this leap often end up spending9 more money in the process. Here’s why:
- When it comes to saving money, the key is to improve efficiency.
- Efficiency is driven by system technology, not the fuel itself.
- Energy prices typically track each other.
- There are typically a few extra thousand dollars of costs that homeowners will incur when they switch from one fuel to another.
Because of these factors, it does not make economic sense for homeowners to switch from one fuel to another. Their best bet in most cases is to upgrade their old, inefficient heating system to a new, high-efficiency system using the same fuel that is already set up in the house. This is even more true in Pennsylvania, where homeowners can secure equipment rebates when they install new heating oil systems or storage tanks on their properties. Depending on the county your clients live in, they could secure rebates of as much as $1,000 when they install new heating equipment in their home. Now that’s a great deal!
If you’d like to learn more, visit the contact us page to reach out to us and ask a question, order our free materials or schedule one of our local experts to meet with you and your team in your office.