What Does the Changing Price of Kerosene Mean for You?

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Despite its widespread usage, kerosene remains a mystery to many people, who don’t know or understand how it works or where it comes from. That means that, even though you might be using kerosene to heat your home, its pricing fluctuations can be unpredictable and worrisome. Understanding the nature of kerosene production and why it costs as much (or as little) as it does is key to starting to save money on your home heating costs.

What Is Kerosene?

Kerosene, known colloquially as lamp oil, is a crude oil product used mainly as a fuel, both industrially and in ordinary homes. In the UK, some people call kerosene paraffin, and use a viscous paraffin oil variant as a powerful laxative. Kerosene is often used to fuel jets, aeroplanes and even rockets, and some Asian countries subsidise the cost of kerosene so heavily that it can be affordably used to fuel outboard motors on tiny fishing vessels. Kerosene is extremely popular to use for lamps throughout countries where electricity is too expensive or too scarce to use overnight, but in the United Kingdom its most widespread use by far is as a heating oil.

What Affects the Price of Kerosene?

A common complaint from users of kerosene is its constantly changing price. How kerosene prices change is determined by a number of factors, the two most prevalent of which are the cost of crude oil and the relative strength of the British pound against the United States dollar. Since kerosene is derived from crude oil, any increase in the cost of crude oil, such as the steady rise the fossil fuel has seen over the last decade, generates a corresponding increase in the cost of kerosene. Of course, like any commodity, the price of kerosene is subject to the laws of supply and demand, so that during winter, when more people are using kerosene to warm their homes, the cost of kerosene increases due to increased demand and lower supply.

Crude oil is traded internationally with the United States dollar. This means that, when the dollar is stronger against the British pound, the cost of crude oil and its derivatives goes up as well. On the other hand, any weakness in the dollar, or strength in the pound, lowers the cost of crude oil and, accordingly, of kerosene.

What This Means for You

Unless you happen to run an international crude oil business, you probably have no control over the price of kerosene. However, choosing the right oil company to provide your home’s heating oil can make all the difference in planning your home heating costs this winter. When you use a planned delivery service, one that monitors the temperature and your kerosene usage so they can fill your tank when you need it filled, you can circumvent the daily fluctuations in the price of kerosene and ensure that your home is being heated as affordably as possible. You can even order your kerosene online through a good heating oil company, allowing you to plan your winter finances and fill your kerosene tank from the warmth and comfort of your own home.

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