Fuel price trends

People today aren't too outraged by the price of oil because it seems cheap compared with the peak prices of 2008. But the reality is that oil sells today at a record high price, and most experts expect it to go higher. In the year 2000, the price of oil was $20-$25 per barrel; by 2005, it had risen to $40-$45. In 2008, oil it hit an astronomical high of $147 per barrel. The price plummeted to $34 in early 2009, but was back up to $65-$70 per barrel by mid-year. The 2008 peak may have been an anomaly, but many experts fear it was a harbinger of prices to come. As the economy moves out of recession and back to moderate growth, the price of oil is likely to resume its upward climb, along with the prices of other forms of energy.

The table below shows recent trends and short term price projections by type of heating fuel.

• Heating Oil and Propane: Heating oil and propane prices track the price of oil and are highly volatile. The national average price for a gallon of heating oil is expected to remain below $3.00 in 2009/2010, but we shouldn't forget how the price soared to nearly $5.00 per gallon in some areas in 2008.
  
  
• Natural Gas: Increasing natural gas inventories and new discoveries have put downward pressure on gas prices in 2009. But experts believe but these prices are artificially low too and will rise as demand increases. And something else to consider… only half the nation's homes have access to natural gas for heating.
  
  
• Electricity: Electricity prices reflect the cost of fossil fuels used to generate it, in particular natural gas and coal. The price of electricity is expected to rise as the cost of these generation fuels rise and as a result of an expected tax on carbon emissions.
  
  
• Wood Pellets: The price of wood pellets has gone up as a result of increased demand. However, new pellet mills are opening all over the U.S. and Canada which should result in more supply and less upward pressure on prices in the future.
  
  
• Cordwood: Cordwood is a local, naturally grown fuel which many people have easy access to. It's easy for almost anyone to get into the cordwood business, so the natural law of supply and demand should tend to keep prices in check moving forward.
  
  
Long term, experts believe energy will become a commodity, and as such, we will move toward a single price for a Btu of energy, regardless of fuel producing that Btu. Unless we embrace lower cost renewable fuels, we may find ourselves back in the same circumstances as 2008 where we're exporting our national wealth to countries that don't like us and living in fear that people can't afford to heat their homes in winter.