Oil Prices Fall Further as Saudi Arabia Cuts Price of Crude to U.S. Customers

November 5, 2014

Augusta, Maine – The Governor’s Energy Office (GEO) conducted its weekly heating fuel price survey on Monday, November 3, 2014, and found the current statewide average cash price for No. 2 heating oil was $3.12 per gallon, dropping another 4 cents this week. The average statewide price for kerosene, $3.68 per gallon, is five cents a gallon less than last week. Propane prices have remained fairly steady; the statewide average price dropped two cents to $2.82 per gallon (for heating customers). A year ago, in early November, heating oil averaged $3.53 per gallon; kerosene, $3.94, and propane, $2.70.

The dynamics of the world crude oil market continue to affect the prices Mainers are paying to heat their homes and fuel their vehicles. Yesterday, Saudi Arabia reduced the price at which it sells crude oil to U.S. customers, but increased the price for European customers. This caused a decline in both domestic (WTI) and global (Brent) crude prices. Speculation is that Saudi Arabia is trying to maintain its world market share in the face of ever increasing U.S. oil production http://www.bloomberg.com/news/2014-11-04/u-s-crude-futures-fall-to-3-year-low-on-saudi-price-cut.html

It’s difficult to predict what this means for the longer term; yesterday Reuters speculated that OPEC would soon cut production http://in.reuters.com/article/2014/11/04/markets-oil-idINKBN0IO0BD20141104. For the short term at least, Mainers are spending significantly less on heating oil and gasoline.

Using this week’s average heating oil price ($3.12), and converting to a common heating unit value (million Btu), the price of fuel oil is $22.50. This compares with an equivalent heating unit value for natural gas of $18.82 (at $1.88/therm); propane, $30.88 (at $2.82/gallon); kerosene $27.26 (at $3.68/gallon); wood pellets, $15.33 (at $253/ton); cord wood, $11.36 (at $250/cord) and electricity, $46.89 (at 16 cents per kwh).

These fuel-only prices do not take into account the type of heating system, nor its efficiency. For example, the electricity cost is for traditional baseboard heat. Other electric heating technologies, such as heat pumps and electric thermal storage (ETS), may offer consumers energy savings. Cold climate heat pumps, a recent technological advancement, are much more efficient than baseboard electric heat, so total energy costs are lower than many other types of heating fuels. ETS offers savings by utilizing off-peak electric rates, available in many areas of the state.

The Energy Office has a calculator on its web site that allows consumers to obtain more detailed estimates of home heating costs, and the price impacts of various types of fuel, heating systems and heating appliances. Heating costs vary considerably from home to home. The home heating calculator can assist homeowners in finding the best heating option for their home, location, lifestyle, and budget http://www.maine.gov/energy/index.html

As of November 3, 2014


Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

3.12

3.07

3.16

3.16

3.06

3.21

High

3.40

3.39

3.40

3.33

3.25

3.25

Low

2.78

2.78

3.00

2.80

2.78

3.16

Kerosene

3.68

3.74

3.64

3.67

3.66

3.62

Propane

2.82

2.85

2.75

2.79

2.79

2.72

It is important to note that the price for heating oil is a statewide average, and that prices in a given geographic region of the state may be considerably higher or lower than this average. This week, within the Energy Office sample, the highest heating oil price ($3.40) was found in one region in the state, and the lowest heating oil price ($2.78) was recorded in two regions. Also, the statewide average price for propane is based on a use of at least 900 gallons a year. Households using propane just for cooking or hot water generally pay a higher per gallon price. The table above provides current Maine cash prices in dollars rounded to the nearest penny.

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For Immediate Release

Contact:
Lisa Smith
(207) 624-7445
lisa.j.smith@maine.gov