Winnipesaukee Forum - View Single Post - Stop HB443 - It will change how you can pre-buy fuel

Mink Islander · 07-16-2009, 08:55 AM

You cannot look at a price curve for gasoline and relate that to heating oil.

As a general premise, gasoline is typically cheaper in the winter than in the summer -- it's demand driven and people simply drive less in the winter so prices tend to be lower. Heating oil is far more seasonal than gasoline and contrary to your graphs it is typically cheaper to buy forward in the summer for the coming winter. Go find the historical NYMEX forward curve for Heating Oil delivered to NY harbor. That's the better proxy for Heating Oil prices in New England.

But we're talking tendencies, not absolutes and as last winter showed, in volatile commodity markets, sometimes typical trends don't happen. Heating oil (along with all refined products) were very expensive in the summer of 2008 and then prices collapsed in Dec/January. That's why folks that bought contracts in summer 2008 felt screwed when the spot market for heating oil suddenly was much cheaper than the prices they had locked in six months earlier.

I agree with you that the restrictions around when dealers can market pre-pay contracts is purely a public policy issue. My best guess (and it is a guess) is that the intent is to not have consumers spooked by high prices in the winter, lock in over priced contracts for the following season in January when in any normal season, prices will be lower in the summer. Government meddling? Sounds like it. But I don't think you're right that this shortened window to market contracts to consumers will make them more expensive.

07-16-2009, 08:55 AM	#9
Mink Islander Senior Member Join Date: Apr 2004 Posts: 753 Thanks: 59 Thanked 271 Times in 129 Posts	Apples and Bananas You cannot look at a price curve for gasoline and relate that to heating oil. As a general premise, gasoline is typically cheaper in the winter than in the summer -- it's demand driven and people simply drive less in the winter so prices tend to be lower. Heating oil is far more seasonal than gasoline and contrary to your graphs it is typically cheaper to buy forward in the summer for the coming winter. Go find the historical NYMEX forward curve for Heating Oil delivered to NY harbor. That's the better proxy for Heating Oil prices in New England. But we're talking tendencies, not absolutes and as last winter showed, in volatile commodity markets, sometimes typical trends don't happen. Heating oil (along with all refined products) were very expensive in the summer of 2008 and then prices collapsed in Dec/January. That's why folks that bought contracts in summer 2008 felt screwed when the spot market for heating oil suddenly was much cheaper than the prices they had locked in six months earlier. I agree with you that the restrictions around when dealers can market pre-pay contracts is purely a public policy issue. My best guess (and it is a guess) is that the intent is to not have consumers spooked by high prices in the winter, lock in over priced contracts for the following season in January when in any normal season, prices will be lower in the summer. Government meddling? Sounds like it. But I don't think you're right that this shortened window to market contracts to consumers will make them more expensive.