Are Oil Prices Beginning to Rebound?

March 17, 2016

Augusta, Maine – The Governor’s Energy Office (GEO) conducted its weekly heating fuel price survey on Monday, March, 2016, and found the current statewide average cash price for No. 2 heating oil was $1.72 per gallon, up for the first time in several months. This week’s price is four cents higher than last week. Average statewide kerosene prices went up a penny, to $2.26 a gallon, while average propane prices dropped a penny, and now average $2.22 per gallon (for residential heating customers). Despite this week’s increase, through mid-March, the average season-long heating oil price is $1.87 per gallon, the lowest price since the Energy Office began keeping records in 2004.

Average Retail Prices of Delivered Fuels in Maine

Heating Season's average price

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

2015/16*

Heating Oil

$2.99

$3.10

$3.67

$3.67

$3.70

$2.85

$1.87

Propane

Not available

$2.80

$3.13

$2.73

$3.10

$2.75

$2.19

Kerosene

$2.99

$3.45

$4.08

$4.16

$4.13

$3.42

$2.42

*average price through mid-March

This week’s price increase reflects a rise in global oil prices from the twelve year lows recorded earlier this winter. As the graph below illustrates, prices have been rising over the last several weeks as Saudi Arabia and Russia agreed to not increase production beyond existing levels. However, this rally may be short lived, as Iran, no longer restricted by economic sanctions, began exporting oil to Europe. Global demand is still flat, and worldwide inventories are still at record highs. So this may be a blip on the radar, so to speak, rather than a longer term trend.

Using this week’s average heating oil price ($1.72), and converting to a common heating unit value (million Btu), the price of fuel oil is $12.40. This compares with an equivalent heating unit value for natural gas of $13.90 (at $1.39/therm); propane, $24.31 (at $2.22/gallon); kerosene $16.74 (at $2.26/gallon); wood pellets, $15.58 (at $258/ton); cord wood, $11.36 (at $250/cord) and electricity (electric baseboard), $38.10 to $55.69 (at 13-19 cents per kwh).

However, fuel prices are only part of the calculation when determining which fuel will save you more this heating season. The type of heating system, as well as its efficiency, needs to be factored into the estimate. 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 are much more efficient than baseboard electric heat, so total energy costs are lower than 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 explore these fuel options further, as well as compare efficiencies of heating systems most closely matching their own system. 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 . Efficiency Maine also has a calculator on its website that can help consumers evaluate their heating options http://www.efficiencymaine.com/at-home/home-energy-savings-program/heating-cost-comparison/

As of March 14, 2016

Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

1.72

1.68

1.71

1.75

1.68

1.84

High

2.10

1.99

1.90

2.10

1.93

1.90

Low

1.40

1.40

1.50

1.50

1.50

1.75

Kerosene

2.26

2.35

2.19

2.22

2.24

2.25

Propane

2.22

2.24

2.12

2.19

2.24

2.38

The price for heating oil is a statewide average; 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 ($2.10) was found in one region in the state, and the lowest heating oil price ($1.40) was also found 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