Syria and home heating oil.

[Raven]

A good friend of mine and her husband own a home heating oil company here in NH. Each year around this time they offer a "pre-buy" to their customers. The lock in a price that they think will be the lowest for the heating season, buy a ton of oil and then offer it to their customers at that price. I generally pre-buy enough gallons to get me through the winter. This year the pre-buy price is $3.549 a gallon. I have not yet signed the pre-buy agreement and got a call this morning from my friend telling me that oil prices have suddenly gotten very volatile and they were alerting all their pre-buy customers. She said they were fairly certain that heating oil would go over $4 a gallon and that they would deplete their pre-buy supply very quickly. She said that most of the people in the oil business think the uncertainty about Syria is the cause for this. She said it has nothing to do with supply and demand. So Syria hits home...literally and anyone who thinks what happens in the Middle East doesn't effect all of us has their head up their ass.

[NYC_SKP]

1. It's entirely fear driven. Syrian exports already down 50%, and it's 35 on list of producers.

It's unlikely to have a direct impact, but because the oil market is all about fear and speculation it probably will be felt here in the US.

Stupid, really, because we could have been energy independent by now had we listened to Carter, et al.

[Junkdrawer]

3. Unless Iran honors its mutual defense treaties. n/t

[GeorgeGist]

2. No sweat ...

A few cruise missiles and peace will follow.

[Recursion]

4. Syria exports less than Vietnam or Germany

But anything that close to Iraq/Iran/Saudi has a way of making oil transporters nervous.

[Raven]

5. That is exactly what my friend said.

[whoiswithme]

6. Home heating oil is diesel fuel

The only difference is the taxes imposed. Burning diesel for heat is a small portion of the overall demand for the product. You have to decide whether you think the supply will increase or decrease and whether demand will stay the same or change. Typically gas prices go down over the winter due to softer demand, but large trucks have to run year around. There are typically spikes due to supply interruptions like a shut down refinery or to demand changes, like a hurricane.

Overall, I'd consider prebuying half your winters needs as a hedge against higher prices, or prebuying it all just to have fuel in the "bank."

[whoiswithme]

7. Or even better

Propane is a buck and a half around here right now. It's not a straight comparison due to a lower BTU content in a gallon of propane, but I think I'd rather be heating with propane than fuel oil right now.