Record U.S. Oil Inventories Continue Putting Downward Pressure on Heating Oil Prices

March 17, 2015

Augusta, Maine – The Governor’s Energy Office (GEO) conducted its weekly heating fuel price survey on Monday, March 16, 2015, and found the current statewide average cash price for No. 2 heating oil was $2.70 per gallon, down eleven cents since last week. Average kerosene prices fell similarly, dropping nine cents this last week, to $3.27 a gallon. Propane prices have been much less volatile over this heating season; this week’s average price of $2.69 (for heating customers) is just down one cent from last week. These price declines continue last week’s trend – after climbing in February, heating oil and kerosene prices appear on a downward trajectory once again. Average heating oil prices have decreased by over fifteen cents a gallon these last couple of weeks, reflecting lower crude oil prices. This week, West Texas Intermediate crude, the North American benchmark, is trading in the $43-$44 per barrel range; Brent crude, the European benchmark, is in the $53 range. These prices are down from the $50-$60 prices observed several weeks ago. With production and stockpiles at all-time highs, most price forecasters do not anticipate prices rising until much later in the year, when U.S. drilling cutbacks will begin to result in declining stockpiles. However, U.S. crude inventories rose to almost 450 million barrels in late February http://www.bloomberg.com/news/articles/2015-03-10/oil-holds-below-49-as-rising-u-s-supplies-seen-expanding-glut , which is the most since August 1982, and 25 percent above the five-year average for this time of year (see below).

So, Mainers will very likely continue to enjoy significantly lower heating oil prices for at least several more months. Using this week’s average heating oil price ($2.70), and converting to a common heating unit value (million Btu), the price of fuel oil is $19.47. This compares with an equivalent heating unit value for natural gas of $19.27 (at $1.927/therm); propane, $29.45 (at $2.69/gallon); kerosene $24.22 (at $3.27/gallon); wood pellets, $15.33 (at $253/ton); cord wood, $12.95 (at $285/cord) and electricity, $43.96 (at 15 cents per kwh). Heating oil is once again on par, price-wise, with natural gas.

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 March 16, 2015


Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

2.70

2.67

2.75

2.65

2.67

2.83

High

2.99

2.99

2.90

2.90

2.90

2.85

Low

2.25

2.25

2.50

2.29

2.30

2.80

Kerosene

3.27

3.34

3.26

3.19

3.27

3.23

Propane

2.69

2.68

2.65

2.71

2.71

2.75

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 ($2.99) was found in one region in the state, and the lowest heating oil price ($2.25) was also recorded in one region. 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