Ben Lowry analysis: With home heating oil prices having shot up in Northern Ireland, is this a good time to buy it?

If you bought home heating oil two weeks ago you made a good buy.
This week home heating oil in Northern Ireland reached £700 for 900 litres and £400 for 500 litres, up from £500 and £280 for most of the summerThis week home heating oil in Northern Ireland reached £700 for 900 litres and £400 for 500 litres, up from £500 and £280 for most of the summer
This week home heating oil in Northern Ireland reached £700 for 900 litres and £400 for 500 litres, up from £500 and £280 for most of the summer

(Click here for articles by Ben Lowry on an amnesty and on passing the autumn equinox)

If you bought it four weeks ago you made an even better buy.

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And if you bought it four months ago you made an outstanding purchase.

But don’t feel too bad if you didn’t. You are not alone. I have botched my own home heating purchase. Yet I have no excuse, because I have been monitoring oil prices.

In fact at the end of January I wrote an article for our website, in which I examined the question of whether or not it was a good time to buy oil amid prices that seemed to be fluctuating up and down (click here for that article).

And I will examine that question again here.

The short answer is yes, it is a relatively good time to buy – but only because it could get worse and you don’t want to end up buying it at the price it was at last Christmas (as, through foolishness, I managed to do). Let me explain.

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Back in late January home heating oil prices had increased yet further, for the second time that month, data from the Northern Ireland Consumer Council showed, yet they were still markedly lower than they had been weeks earlier at Christmas.

The average price of a 900 litre oil delivery in Northern Ireland was £799, up £80 from the middle of that month. A smaller delivery of 500 litres was up over that time from £426 to £454.

But it was still a better-than-average time to buy oil compared to the invasion of Ukraine, which had happened almost a year previously in February 2022 and sent prices sky high. Just before the war began, it cost £556 to buy 900 litres of oil. It then leapt to £758 after the conflict got under way, and peaked the following week at an eye watering £1,182.

Then for many months in 2022 prices for 900 litres fluctuated in a range between £750 and £950. Prices for 500 litres were in a range between £450 and £550. Then for almost two months running into December prices fell, to £744 for 900 litres, £419 for 500 litres. Then they spiked up, reaching £878 just before Christmas, on December 22 (£501 for 500 litres).

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I bought in a panic then, just before Christmas on December 23, because while I thought I had enough oil to last into January I feared the humiliation of running dry over the festive period when relatives were visiting.

In fact, after my late January article, prices began a long and gradual descent of about £10 or £20 per 900 litres until by late May they were just under £500 for 900 litres and £280 for 500 litres.

David Blevings, Director of the NI Oil Federation welcomed that fall and told this newspaper on May 23: “Oil prices react quickly to change, and this is great news. We would encourage consumers to fill their tank and follow the American Government’s lead who this week, are looking to buy two million barrels of oil for their strategic reserve due to the low price and before OPEC meets again on June 4.”

It was good advice.

I knew that I should have bought then but it was the summer and I assumed demand would collapse and there seemed to be no hurry. I had not paid close attention to Mr Blevings’ reference to OPEC, and what America had done, or I would have filled my tank. Instead, I did nothing.

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Prices for home heating oil in Northern Ireland kept bumping along at that low level until the end of July when they started moving up decisively. This week 900 litres reached £700 and 500 litres reached £400.

Mr Blevings said to us yesterday: ‘Unfortunately we are seeing a further increase in oil prices due to Russia halting exports of diesel and petrol in what they say is an attempt to ‘stabilise’ oil prices. Oil prices have increased steadily since June and started to fall last week until Russia took this action on exports. It’s not good news for consumers as 900 litres broached the £700 mark today.

“We don’t see prices falling in the short term and would encourage consumers to speak with a NIOF distributor member and if needed, work out a payment arrangement that works for both parties.”

So he says prices are unlikely to fall.

My own advice is less informed, and more based on the record of oil prices in NI over the last 18 months.

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The current prices, while painfully high compared to the summer, are still less than halfway between the post Ukraine lows and the highs. Therefore, any purchase done now will be at reasonable post Ukraine invasion levels.

I ended my January article by saying: “The only thing that can be said with confidence is that if you buy now you are by no means buying at one of the worse times compared to averages since the summer. But that could change within a fortnight … So what am I planning to do? It looks like a bigger purchase than I got at Christmas, but not a full tank – in that no doubt forlorn hope of a fall in the spring.”

That is what I did back then. And what I am going to do now. Buy less than a full tank.

Ben Lowry is News Letter editor