The early birds may just get burned this heating season if they prepay or refill the oil tank in their home anytime soon.
Prices are about 60 cents to $1 a gallon higher than they were this time last year and at least two local oil dealers and an economist from the U.S. Energy Department say those prices may be artificially high.
Instead of home heating oil prices being at the bottom of the market in June and then gradually rising as the new heating season - October through March - progresses, prices could drop significantly depending on demand and other market factors.
Craig Priebe, vice president of Penn Pride, 1248 Wayne St., said customers last year could prepay for heating oil for the entire season at a locked in price of $2.54 per gallon.
"This year I'm not even offering a prepaid price because I think the current price is artificially high," he said.
Priebe said if he allowed a customers to buy oil at the current market price of $3.34 per gallon and prices were to tumble he would have a lot of unhappy customers.
Penn Pride's price for 150 gallons or more in December last year was $2.90, so customers who locked in the $2.54 price in September were happy. Heating oil prices rose steadily through the winter as usual until the price was $3.50 at the end of April.
But instead of dropping back down in May and June, prices continued to rise for no apparent reason.
"In my mind, oil isn't worth $1 more this year," Priebe said.
He subscribes to the theory that when the stock market tanked, speculators took their money to oil, gold and other commodities. If those investors decide to suddenly pull their money out of oil, the price could drop sharply, he said.
"You used to be able to predict how prices would perform," Priebe said. "Those days are over."
Energy economists can point to a few factors that have caused oil prices to rise, including the revolution in Libya that has crimped a pipeline that had been pumping 1 million gallons of light sweet crude oil into the global markets.
Although most of Libya's oil is consumed in Europe, when it was cut off Europe then had to compete on the global market for a new source, said Neil Gamson, an economist with the Energy Information Administration, a bureau of the U.S. Energy Department.
Gamson said upsets to the flow of oil and sharp changes in demand have caused some of the nervousness about the oil market this year.
Ongoing unrest in oil-producing regions and the possibility that demand will be more resilient than expected could keep prices steady or move them higher.
But worries about the global economic recovery, the debt crisis in the European Union and other fiscal issues facing national and subnational governments could force prices down.
"There has been a lot of economic disappointment in the U.S., Europe and other places that can drive prices lower," Gamson said.
If the turmoil in Libya continues, it could drive prices higher, just as a quick resolution of unrest there could allow Libya to ramp up oil production and exports sooner than anticipated, building supply.
Officially, the administration's forecast is for oil prices to rise as the winter marches on, reaching $3.74 per gallon by Dec. 31 and ending this heating season with a high of $3.95 per gallon by March.
A new forecast is due out Oct. 12, Gamson said.
All that said, David DeGezell, owner of I.H.S. Fuels, Mohnton, said he isn't offering a prepaid price to his customers this year, either.
"The market is too volatile," DeGezell said.
He said he does not advise customers when to buy oil and simply fills their orders when they do buy.
"It varies by the customer," he said.
Whether his customers are early birds or not, DeGezell said he doesn't try to predict which way heating oil prices will go this winter.
"You don't know what the market is going to do this afternoon," he said.
Contact Dan Kelly: 610-371-5040 or dkelly@readingeagle.com.
