Heating Fuel Prices Increase, then Stabilize After Hurricane Harvey Disrupts Petroleum Supply Chains

September 20, 2017

ugusta, Maine – The Governor’s Energy Office (GEO) conducted its weekly heating fuel price survey on Monday, September 18, 2017, and found the current statewide average cash price for No. 2 heating oil was $2.19 per gallon, 16 cents higher than late August, when Hurricane Harvey hit the Gulf Coast. Similarly, the average statewide kerosene price ($2.86 per gallon) is also up significantly, 28 cents higher than a month ago. Average propane prices did not follow this trend; this week’s average statewide price (for heating customers) is $2.38 per gallon, only two cents higher than late August.

When Hurricane Harvey hit the Gulf Coast at the very end of August, it caused significant disruptions in the production and distribution of petroleum products throughout the Gulf Coast and the entire eastern part of the U.S., thereby impacting prices in Maine. Gulf Coast refineries comprise almost half of the country’s refining capacity, and most either shut down or reduced operations in anticipation of the hurricane’s landfall. The graph below illustrates the impact of Hurricanes Katrina, Gustav, Ike, and now Harvey, to U.S. refinery operations.

Consequently, the Colonial Pipeline, which runs from Houston to New York Harbor and normally carries 2.5 million barrels of petroleum products daily, was forced to severely curtail shipments due to low supplies. These supply disruptions resulted in price increases for gasoline, diesel, and heating fuels throughout the Gulf Coast, Midwest, and eastern third of the U.S.

Below is a map of the United States that shows the price increases of gasoline in the days after Harvey.

Heating fuel prices were similarly impacted. In Maine, retail heating fuel prices increased 16 cents a gallon from August 28th to September 18th. Kerosene prices increased even more; average k-1 prices spiked from $2.34 a gallon to $2.86 in the same time period (kerosene for heating is almost identical to on-road diesel). Propane prices were generally not impacted by this event. Propane is distributed through different channels than disillates such as heating oil and gasoline. In addition, peak demand for propane occurs in the winter months. Lower demand resulted in minimal impact to domestic prices.

Maine Retail Heating Fuel Prices, as of September 18, 2017


Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

2.19

2.18

2.16

2.23

2.16

2.35

High

2.42

2.39

2.35

2.41

2.42

2.35

Low

1.95

1.99

2.00

2.00

1.95

2.35

Kerosene

2.86

2.89

2.81

2.87

2.83

2.95

Propane

2.38

2.49

2.24

2.32

2.41

2.38

Existing inventories of petroleum products have been impacted by the reductions in refinery output, but have not been depleted. As of September 8th, east coast inventories were down 17.4 million barrels over this time last year.

The following table compares the prices between various heating fuels, and converts these prices to a common heating unit value (dollars per million Btu).

Comparison of Heating Fuel Prices per Million Btu¹

Fuel Price (in dollars) Fuel Price (dollars per million Btu)
Cord Wood ($250/cord) $11.36
Natural Gas ($1.31/therm) $13.14
Heating Oil ($2.19/gallon) $15.79
Wood Pellets ($261/ton) $15.82
Kerosene ($2.86/gallon) $21.19
Propane ($2.38/gallon) $26.06
Electricity (baseboard) (15-18 cents/kwh) $43.94-$52.75

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. 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/

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 found was $2.42, and the lowest heating oil price found was $1.95. 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.


¹ Does not factor in the efficiency of the heating system

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For Immediate Release

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