Heating Oil Prices Continue to Rise in Off-Season; Propane Prices Remain Steady

June 15, 2016

Augusta, Maine – The Governor’s Energy Office (GEO) conducted its weekly heating fuel price survey on Monday, June 13, 2016, and found the current statewide average cash price for No. 2 heating oil was $1.93 per gallon, which is eleven cents higher than a month ago. Average statewide kerosene prices have also increased; this week’s price was $2.45 per gallon, also eleven cents higher. In contrast, propane prices have declined slightly over the last month, currently two cents lower at $2.19 per gallon.

Heating oil and kerosene prices continue to follow the price of crude oil, which has risen steadily from a low of under $30/barrel in January, to over $50/barrel in early June. This week, crude prices dipped a bit, and are now just under the $50/barrel level. Heating fuel price increases have generally lagged behind crude oil increases, in part due to very high storage inventories, but they are now inching up. Heating oil prices, statewide, have increased twenty cents a gallon since mid-April, and k-1 has increased 17 cents.

However, most energy market forecasters are not predicting oil prices to escalate back to levels seen a couple of years ago, at least not through 2017. Below is a chart of average prices expected, nationwide, for several energy sources, through 2017 (EIA June 2016 Short Term Energy Outlook).

So, while oil prices are higher than they were several months ago, forecasters do not expect prices to rise significantly over the next year or so.

In contrast, average propane prices have remained stable over the last several months, not varying more than a couple of cents. Unlike oil, whose price is determined by global markets, propane prices this past season reflect record U.S. production and inventory levels rather than prices abroad. Propane is a by-product of shale oil and gas extraction, so domestic production of propane has increased along with oil and gas.

Using this week’s average heating oil price ($1.93), and converting to a common heating unit value (million Btu), the price of fuel oil is $13.92. This compares with an equivalent heating unit value for natural gas of $11.70 (at $1.17/therm); propane, $23.98 (at $2.19/gallon); kerosene $18.15 (at $2.45/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 money over the course of a heating season. The type of heating system, as well as its efficiency, is also an important factor in determining final costs. 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 June 13, 2016


Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

1.93

1.90

1.93

1.95

1.87

2.07

High

2.40

2.19

2.01

2.40

2.05

2.10

Low

1.70

1.70

1.75

1.70

1.70

1.95

Kerosene

2.45

2.51

2.38

2.41

2.42

2.53

Propane

2.19

2.21

2.11

2.15

2.18

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 ($2.40) was found in one region in the state, and the lowest heating oil price ($1.70) was found in three regions. Also, the statewide average price for propane is based on consumption 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