A season of paradox
Folks living within a vast swath of the eastern United States had their festive plans for caroling and last-minute holiday shopping disrupted over the weekend by the biggest snow storm in years. In many regions like the greater Washington D.C. area, the storm shattered old records for December snowfall … and winter hadn’t even officially begun yet.
The blizzard, combined with the sub-freezing temperatures, all but promises a white Christmas in regions hit by the storm.
Of course, snow days and sledding and cozy times together by an indoor fireplace come along with treacherous roads and driveways that need to be shoveled and the high heating bills required to keep everyone warm inside.
And this year, as people brace for those wintertime heating bills, they’ll be chagrined to discover that the soft economy has done little to lower the cost of keeping their homes warm. It’s an ongoing paradox we’ve discussed here before: how the normal rules of supply and demand don’t really apply when the product in question comes from overseas sources that have their own way of artificially controlling pricing.
Last summer, we discussed how oil prices were rising despite soft demand and swelling inventories. This winter, prepare for more of the same. We’re approaching our third straight year of economic downturn, and supplies of heating oil are overflowing, so much so that the early snowy cold spell isn’t expected to make much of a dent. Still, many forecasts show consumers paying more for their heating oil this year than they did in 2008 – when, by the way, it was hardly cheap.
Low demand and high prices: It’s a paradox indeed, but it’s not a mystery. Heating oil prices rise when crude oil prices rise. And here in the U.S., crude prices rise for all sorts of reasons, usually reasons that have little to do with supply or demand, or even the weather. Like so much of the oil we consume, the explanation for those persistently high winter heating prices is located far from home.
Wishing you a warm holiday.
Tags: CEA, Consumer Energy Alliance, domestic energy, energy prices, energy security, energy supply, natural gas, oil
This entry was posted on Tuesday, December 22nd, 2009 at 1:17 pm and is filed under CEABlog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.