OPEC Proposal to Limit Crude Oil Production Stimulates Markets; Heating Fuel Prices Increase at Start of Heating Season

October 4, 2016

Augusta, Maine – The Governor’s Energy Office (GEO) conducted its weekly heating fuel price survey on Monday, October 3, 2016, and found the current statewide average cash price for No. 2 heating oil rose to $1.93 per gallon, an increase of five cents over the last week. The average statewide kerosene price follows the same trend; this week’s price was $2.45 per gallon, also up five cents since last week. Propane’s average price rose minimally, gaining only a cent over the last week, to $2.19 per gallon. These price increases follow several weeks of very steady pricing for all fuels.

Last week, the Organization of Petroleum Exporting Countries (OPEC) met and agreed to limit production increases among their members. Over the last two years, OPEC has repeatedly discussed curtailing production as a way to increase global prices; however, they have not been successful. Even if the agreement in principle translates into specific production limits, a global supply glut still remains, so the price impact over time is unclear http://www.wsj.com/articles/oil-prices-fall-on-skepticism-over-opecs-efficacy-1475575585. However, an agreement-in-principle was enough to stimulate oil markets last week, and heating fuel prices rose in response. Crude prices have since declined slightly, so this may be a very short lived rally.

Price volatility is something Mainers must always consider when making heating fuel choices this season, even in this comparatively lower priced oil market. Mainers seeking the best heating fuel value for their dollar will need to compare fuels based on current costs, their ability to cope with fluctuating prices, access to fuel choices, and lifestyle choices. On the next page is a chart that, for illustrative purposes, is our best effort to compare prices of the various fuels with the fuel most Mainers are familiar with – heating oil. The chart contains prices of heating fuels on a heating value per unit, or btu basis, and then converts these prices to the equivalent price of heating oil. The chart also goes one step further, by providing an estimate of the per gallon price, taking the average heating system efficiency into account. (Please note that every home heating situation can be unique, given the condition of the heating equipment, so your costs may differ from those listed). Also, the average price for natural gas reflects off-season supply costs, so natural gas costs will be higher once the heating season rates become effective.

Maine Residential Heating Fuel Prices, Heat Content and Price per Gallon Equivalent to Oil
Heating Fuel Fuel Price per Unit
(gal, therm, cord, ton, kwh)
Fuel Heat Content per Unit (btu) Price per Million btu ($/mmbtu) Price per Gallon (equivalent to oil) Average Heating System Efficiency Price per Gallon (equivalent to oil including heating taking heating system into account)*
Heating oil $1.93/
gallon
138,690 btu/gal $13.92 $1.93 82% $2.35
Natural Gas $1.31/
therm
100,000
btu/therm
$13.12** $1.82 90% $2.02
Cord Wood $250/cord 22,000,000 btu/ton $11.36 $1.575 63% $2.50
Wood Pellets $258/ton 16,500,000
Btu/therm
$15.58 $2.16 78%
(stove)
$2.77
Kerosene $2.45/
gallon
135,000 btu/gal $18.15 $2.517 75% $3.36
Propane $2.19/
gallon
91,333 btu/therm $23.98 $3.326 90% $3.70
Electricity - baseboard $0.13- 0.19/kwh 3,412 btu/kwh $38.10-$55.69 $5.284- $7.724 100% $5.284-$7.724
Electricity – cold climate heat pump*** $0.13- 0.19/kwh 3,412 btu/kwh $38.10- $55.69 $5.284- $7.724 351% $1.50-$2.20

* does not account for distribution system heat losses. A calculator is available on Efficiency Maine’s website http://www.efficiencymaine.com/at-home/home-energy-savings-program/heating-cost-comparison/ to perform estimates of heating costs for a specific homeowner’s fuel and heating system

**natural gas prices reflect some off-season supply costs; prices will be higher as the heating season progresses

***heat pump fuel prices are approximate, based on heat pumps with HSPF of 12 or greater

As of October 3, 2016


Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

1.93

1.90

1.93

1.96

1.87

2.08

High

2.15

2.09

2.08

2.10

2.02

2.15

Low

1.70

1.70

1.75

1.70

1.70

2.00

Kerosene

2.45

2.50

2.41

2.41

2.39

2.55

Propane

2.19

2.22

2.15

2.11

2.16

2.35

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 ($2.15) was found in one region in the state, and the lowest heating oil price ($1.70) was also 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