The price of fuel for our cars and for our homes is currently a cause for concern for many households around the country. The cost of everything is increasing faster than our salaries and this puts more pressure on our already burdened household budgets. Though still considered a cheaper option for some and it certainly has advantages, the price of home heating oil is also affected by these rises. As domestic oil is a by-product of the distillation process, cost is also affected by global demand for crude oil.
What is Kerosene?
If you have a domestic oil tank at your home, there is a very strong chance that you are burning kerosene in your central heating system. Kerosene oil or sometimes known as kerosene 28, it is the most common fuel used to heat households. They are also most effective fuel types if you use an Aga or other such household appliances. It is a liquid product that has been used in oil lamps since Victorian times and is still in common use today. The name comes from ancient Greece, “keros” meaning “wax”. In the UK there are two grades of kerosene (or paraffin as it is still sometimes called). Grade C1 is used in portable stoves such as those used in camping, lanterns and other small burners. C2 is a heavier solution that is used for domestic heating.
Another option is gas oil, though this tends to be used by commercial premises and is a very economical investment for fueling larger buildings and complexes. It is the same red diesel as used in agricultural equipment.
Lean Times and Green Times
There are benefits beyond the purely financial to using oil over conventional energy methods. Firstly, it is a more environmentally friendly method as it contains far less sulphur than other fossil fuels. It is safer in your home as it does not burn easily and as it is stored in a tank, it is kept in a safe environment.
Despite the current high level of heating oil prices, there are many ways that the household can save money. The first option follows well-used advice to reduce overall consumption. For example, switching off or turning down the temperature on the heating on warmer days or when there will be nobody in the house, setting the timer for the hot water tank for key times of the day and switching off radiators in rooms that are not being used. Take showers rather than baths, keep your boiler serviced regularly or if it is older, consider buying a newer and more economical model. Consider also getting your home as fully insulated as possible and replace old insulation that is no longer as effective.
Of course it shouldn’t need repeating that you should always shop around for the best price for your heating oil, but there are other ways to save money. These include buying in bulk, joining The Heating Oil Club or organising a formal agreement with your neighbours to buy in large quantities to keep costs down for everybody. It is also advisable to buy your oil early in the season when costs tend to be lower and there is little risk of a shortage before the temperatures reach their minimum and demand is greater. Finally, buy heating oil from a local supplier to keep cost of delivery down.
Learning to Trade Oil Prices
As detailed above, many advantages exist in understanding how oil is utilized as a commodity for all industrialized economies. The demand for oil is soaring as globalization continues to develop. Due to high demand, the price of crude oil has risen over 10 times in the last decade. Individuals can participate in this booming market by trading in the oil commodity market or through ETF funds (exchange traded funds) designed to follow the price of crude oil.
Exchange traded funds are somewhat recent investment vehicles that track various indices and are traded in stock exchanges similar to other stocks and equities. An example of an Oil ETF fund would be the US oil fund or ticker symbol (USO). Unlike mutual funds, ETF shares can only be traded in a stock exchange and are not redeemable like units of mutual funds. ETF's can also be bought and sold throughout the day, unlike mutual funds, where they are generally bought or sold after the close of the market on any given day.
Nick Thorping is a freelance writer and keen DIY amateur. He has noticed that the cost of domestic oil prices, as with any other type of fuel, is currently expensive but there are ways to save money. He recommends that it is best to shop around for the best deals and use the tips above to cut the cost of your annual fuel bill.