Higher heating oil costs may leave you shivering this winter
A law passed three years ago might finally have a significant impact on heating costs, perfect timing given the advent of the winter season that is set to soon chill much of the United States.
In 2016, the International Maritime Organization (IMO) issued guidelines significantly lowering the presence of sulphur oxide emissions from marine fuel. Since a large percentage of oil is shipped via nautical channels and utilizes the fuel source, this higher standard fuel’s increased cost will hit consumers.
According to petroleum giant Shell, ”Under the new global cap, ships will have to use marine fuels with a sulphur content of no more than 0.50% against the current limit of 3.50% in an effort to reduce sulphur oxide emissions.”
“There's a lot of uncertainty over the exact degree prices will be impacted, but without a doubt the IMO [low sulfur] rule for ships will mean a tremendous increase in demand for lower sulfur distillates like ultra-low sulfur diesel and heating oil, thus sending prices likely quite a bit higher,” Patrick DeHaan, head of petroleum analysis for GasBuddy, told FOX Business.
This is a bit of unwelcome news, especially for those in the northern portions of the United States where heating a residence or a place of business is routinely done throughout the day.
The end result of the new fuel costs will hit consumers for what is already a significant monthly expenditure for many homeowners.
“It could lead to a jolt of 15 percent to 25 percent as we approach 2020 and more becomes clear about how demand will rise. Some vessels are installing scrubbers to meet the rules, while many will likely be filling up with ULSD,” said DeHaan.
“Consumers that still rely on heating oil may not feel the hit until they refill their tanks into the new year but they should expect to pay more. For those that haven't filled their tanks yet- they should absolutely do so to avoid the impact that's coming. I think we could easily see diesel prices soar 25 [cents] to 75 cents per gallon by this time next year.”