Oil is one of the most essential fossil fuels in use today. It is used to power entire industries and is one of the most important sources of energy in the world. When oil burns, it releases heat. This heat is ultimately turned into a number of different kinds of energies that are used to power a range of various machines. In many houses throughout Gloucester, people don’t prefer using gas-based heaters since the gas grid network hasn’t extended to over to the area, which is why people have to rely on oil fuel as a means of heating their homes during the cold winter months.
However, you might have noticed that every time you order oil fuel through a distributor, they give you a different quote. The prices of oil fuel continue to differ, regardless of which distributor you choose. Reputable companies such as Hobbs Bros oil fuel distributors in Gloucester have been operating in this field for quite a while now, and have built considerable pedigree over the past several years. If you are wondering why the prices of oil continue to fluctuate so drastically, here are some key reasons you should be aware of.
The Commodities Market
Oil is a commodity that’s traded on the international commodities market, which means that public and corporate investors have the option of buying a stake in the oil sector and selling it when it reaches a high. The concepts of demand and supply play a very important role in determining the price of oil barrels in the international commodities market. If energy producers release reports that oil production has slowed down sharply, the prices will skyrocket. At the moment, since most of the focus lies on renewable energy, the oil sector has fallen considerably. It’s one of the main reasons why prices of crude oil are so low right now.
The currency used in the international markets is the Dollar, so the conversion rates between the dollar and the pound sterling also play a role in determining the price at which oil is brought into the UK. For instance, when news broke out that Britain would be exiting the European Union, the pound sterling took a sharp hit and dipped considerably within the space of a few days and has not yet recovered. Historically, the pound sterling has been priced much higher than the dollar, and fluctuations in the international currency markets obviously have an impact on the final price quoted to the consumer.
Last but not the least, you also have to think about the profit margins maintained by the company that distributes the oil door to door. Most companies charge a specific percentage on top of the final price at which the oil is brought in their storage. Apart from this, you will also need to pay the local taxes such as the VAT as well, so make sure you know all of these important factors.