Brexit and Oil prices – What Brexit could mean for oil prices
The Friday after the Brexit vote revealed that Britain would leave the European Union, oil prices settled at 5% lower than they had been. This immediately spurred concern that oil prices would drop, putting to an end the three-month long recovery that was being experienced by the global oil markets. This is not the first time that financial markets worried about the implications of the Brexit vote, but was the first indication that perhaps they had not thought about all of the risks that would be involved with the ‘leave’ vote actually winning.
The dollar index saw a jump of about two percent immediately following the leave vote, which is the highest it has jumped since 2008 when the financial crisis occurred. At the same time, the pound dropped to the lowest it has been in 31 years, following the announcement by Prime Minister David Cameron that he would be stepping down due to the vote. The dollar starting to rally as a result of the news means that oil (and similar commodities that are counted in greenbacks) will become much costlier for those who use the euro and other forms of currencies.
Oil market analysts however attempted to look at Brexit with a more well-rounded view that was less alarmist, explaining that Brexit is a historic event that is not something that can be considered ‘finished’ anytime soon, just because the vote is over. However, just because the implications of Brexit will take a while to sort out, does not mean that the oil markets are going to stay in turmoil for a long period of time. There is no reason to think that a financial meltdown will occur from the Brexit vote, and the UK and the EU do not appear to be anywhere close to a collapse.
Proof of this can be seen in current oil prices which have seemingly held their rates. While they fall to their lows after news of the leave vote, for the past month they have largely held higher than the original drop. It is possible that Brent will trade lower according to some oil analysts, and the worst may still be to come, but once that occurs there is no reason to believe that oil will not settle back in at a more comfortable spot on the market. The truth is, on a global scale, the situation remains unclear – but for consumers of heating oil, it’s business as usual.
Losing heat from your home?? Don’t Let the Heat Out!
With the high cost of heating oil and the average temperatures of Irish winters, everybody has a reason for concern about losing indoor warmth to the outdoors. It’s a fact of basic physics that heat travels from warm areas to colder areas, e.g. the outside of a heated building. If the temperature outside is colder than that indoors, heat will travel out of the house – if you let it.
Where Does The Heat Go?
Extensive studies have shown that about 35% of heat is lost through walls, 25% through the roof, 15% through doors, 15% through the floor and 10% through the windows. The percentages vary from building to building, but the essential point is that unless you take preventive measures you’re going to pay dearly to stay warm. Some of these measures cost nothing, though anything you spend on effective heat loss prevention is a good investment in the long run.
With cavity walls – designed to keep outside moisture away from the inner wall – good insulation will also be moisture-resistant, and it is probably the most cost-effective action you can take to prevent heat loss if none is already in place. A proper installation will cost you several hundred pounds, but the savings per year can return your investment in just three or four years.
With solid walls insulation can be added on the interior or exterior, but this is a bigger job and you may want to concentrate on the windows, which also leak a lot of heat if they are not well sealed.
Windows & Doors
Double-glazing is ideal, but it does cost upwards of £75 for an average window, and you can get thermal lined curtains for around £20 that will save almost as much heat if you remember to close them at dusk, including those in rooms not in use.
Draughts around windows and doors are common, but they can be drastically reduced with strips of plastic-covered foam or rubber compression seals, available in a variety of types and sizes. You can also get sealants made of silicone or polyethylene that come in tubes; you simply squeeze them into cracks and gaps that are too small or irregular for sealing strips.
Maximising Heat Retention
Further suggestions include keeping an aluminium reflector sheet behind any radiator that’s attached to an outside wall, and filling any gaps between floor boards and skirting boards with material such as newspaper or plastic. More heat escapes through the roof than through floors, so be sure the attic space is insulated between ceiling joists. Both mineral fibre quilts and insulation made from natural wool are available in almost any DIY store; they’re both very affordable and quite simple to install.
Remember that the sun provides heat even on cold days; get all the free solar heat available with the curtains open, then close them to help keep it inside. Avoid hanging curtains over radiators, as they can serve to direct the heat out the window instead of into the room. Close off any unused rooms; you’ll retain more heat in the lived-in parts. If you don’t have thick carpets, add as many rugs as possible; they can make everything look and feel much warmer.
If you are among around 68% of Northern Ireland residents who rely on oil to heat your home, chances are you’ve already learned quite a bit about the rise in cost and are not looking forward to next winter. What you should remember is that now in summer, when heating oil is the last thing on your mind, is the best time to take stock of your previous usage and make plans to regulate that usage. Now is the time save yourself some money without suffering chilblains or worse when the weather turns cold again.
A service contract that ensures your boiler gets inspected by a certified OFTEC-registered technician on at least a yearly basis, is the best way to go if that option is available, but it’s not necessary; you can call on a local company for an inspection at any time. Obviously it’s better to do so in warmer months when less heating oil is used, boilers are not working overtime and neither are inspectors and repairers. Don’t wait until the dead of winter, or for your boiler to start malfunctioning, to schedule maintenance and/or repair.
A well-maintained boiler can actually cut your fuel costs by as much as 50%. Over time the residue of spent fuel oil builds up and reduces efficiency, meaning you’ll have to use more fuel to produce the same amount of heat, which is not good for the environment – or for your bank account. Proper maintenance also greatly reduces the risk of potentially disastrous leaks; these are rare but not unknown, and you really don’t want to experience one.
Another factor to consider is when to buy heating oil, and how much to purchase. Be aware that keeping the oil tank full or nearly full in summer months reduces the accumulation of condensed water, and prices are usually lower than in high-demand winter months. Also, try to purchase as much as possible in a single delivery, as you can save a significant amount per litre on larger quantities, plus saving on delivery charges.
There is no specific guide to how much heating oil you’ll require in a given period, but common sense actions such as lowering the thermostat a few degrees and making sure the boiler is working at top efficiency will reduce that amount and your heating costs. Keep a careful record of the amount you’re using at all times; if consumption seems to be increasing you may have a leak, so keep a close watch on seasonal and annual consumption.
A good resource for information and consumer advice is available at www.consumercouncil.org.uk. If your locality has organised an Oil Buying Club, as many have done, you can usually get a better price on smaller quantities from the distributor. There is little you can do individually about the bottom line price of heating oil, but you do have options, as well as responsibilities when it comes to how much you spend on it.