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.
Oil versus gas – why oil is the better choice
Choosing a fuel to use to heat your home is a very important decision. Not only is heat important to make sure that your home stays a comfortable place of shelter, but it is also a main household bill that should be carefully considered. There are many reasons why oil is the better choice when it comes to choosing a fuel source to heat your home. Here are just a few factors to consider if you are looking at oil versus gas as a heating source.
First of all, you may be surprised to learn that heating oil supplies are actually quite plentiful, despite the fact that the news would have you believe there is a shortage. Renewable biofuel options are helping to add additional sources to an already very large sustainable supply. This means that oil is easily available and is not going to run out anytime soon. Natural gas is not a renewable source of heating, and that actually makes it more likely to run out.
Second, contrary to popular belief, heating oil is less expensive than natural gas, even though most people seem to think it’s the other way around. In fact, statistics prove that for the past 22 years, heating oil was less expensive. This makes it a great choice for those who want to keep their household budget under control. Plus, if you already have a heating oil system, it just makes sense to keep it, because it could cost you a five figure sum to convert to natural gas!
Following up on this point, there is no reason to convert a heating oil system to natural gas, because the newest technologies have allowed most oil heat appliances to last over three decades – if they are maintained properly. That means you can get 30 years of use out of your heating oil system, and they are evolving and becoming more and more advanced. On the other hand, a natural gas furnace on average lasts from 11 to 14 years.
Finally, if you need one more reason to choose heating oil over natural gas, consider this: heating oil is a clean fuel. The oil that is used today produces almost zero emissions, and most new oil system technologies actually re-burn fuel, recycling it and reducing emissions overall. A properly maintained system will burn very cleanly, meaning that you will help keep the world green by making a smart heating decision.