Heating Costs Forecasted Slightly Higher as Heating Season Begins

October 19, 2017

Augusta, Maine – The Governor’s Energy Office (GEO) conducted its weekly heating fuel price survey on Monday, October 16, 2017, and found the current statewide average cash price for No. 2 heating oil was $2.21 per gallon, 2 cents higher than in mid-September. The average statewide kerosene price ($2.84 per gallon) is down a couple of cents over the same time period. Average propane prices, however, have increased over the last few weeks; the statewide price (for heating customers) is $2.54 a gallon, which is 16 cents higher than mid-September.

As the heating season gets underway, the U.S. Energy Information Administration (EIA) is forecasting higher household expenditures for heating, due to higher energy costs and expected colder temperatures (i.e., colder than last year) https://www.eia.gov/special/heatingfuels/resources/winterfuels2017.pdf . For the eastern part of the U.S., however, temperatures are expected to be comparable to the average of the last five winters. Nationally, the EIA heating oil price forecast is about 25 cents/gallon higher than last year. Below is a table with the Maine statewide average price for heating oil, kerosene, and propane at this time last year, compared with this week’s prices.

Average Residential Heating Fuel Prices Maine October 2016 & 2017

The Northeast region, which is more dependent on heating oil than other parts of the country, also begins the heating season with lower fuel inventory levels than last year (almost 17 million barrels lower [32%] as of late September). Refinery shutdowns along the Gulf Coast during Hurricane Harvey have impacted heating oil inventories as well as gasoline and diesel supplies. In addition, there is strong demand for petroleum distillate exports. Both factors are likely to contribute to higher heating oil prices this season https://www.eia.gov/outlooks/steo/report/winterfuels.cfm. Despite these higher price forecasts, national average household heating oil costs this winter are expected to be lower than the previous five year average. See table and graph below.

EIA Short Term Energy Outlook October 2017

Average Residential Winter Heating Fuel Prices

Also as indicated above, propane prices are also expected to be higher than last winter because of higher exports and higher crude oil prices (propane is a by-product of both oil and natural gas production). Due to strong global demand, propane inventories were lower than the five year average for this time of year, after beginning last winter well above the five-year average level.

So, while prices are expected to be higher than last year, the EIA is not forecasting a return to the extremely high prices seen from 2011 through spring 2014.

Maine Retail Heating Fuel Prices, as of October 16, 2017


Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

2.21

2.17

2.22

2.24

2.15

2.36

High

2.47

2.35

2.35

2.40

2.47

2.40

Low

1.95

2.00

2.00

2.00

1.95

2.35

Kerosene

2.84

2.88

2.82

2.82

2.78

2.91

Propane

2.54

2.59

2.58

2.42

2.50

2.66

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
Wood Pellets ($258/ton) $15.64
Natural Gas ($1.37/therm) $13.74
Heating Oil ($2.21/gallon) $15.93
Kerosene ($2.84/gallon) $21.04
Propane ($2.54/gallon) $27.81
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 $2.47, 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