Heating Fuel Prices Trend Upward as OPEC Works to Extend Crude Oil Production Cuts

November 29, 2017

Augusta, Maine – The Governor’s Energy Office (GEO) conducted its weekly heating fuel price survey on Monday, November 27, 2017, and found the current statewide average cash price for No. 2 heating oil was $2.44 per gallon, 9% higher since the heating season began in October. The average statewide kerosene price ($3.05 per gallon) is up 6%, and propane prices (for heating customers) are up 5% during the same time period. These price increases come on the heels of price spikes immediately following Hurricane Harvey in late August, which affected over one third of the nation’s refining capacity¹. In total, Maine prices for heating oil, kerosene, and propane have climbed 20%, 11.7%, and 12% respectively since late August, prices which are 20%, 20%, and 13.4% higher respectively than they were at this time last year. See table below.

Date Average Residential Fuel Price, Maine 2017
Heating Oil Kerosene Propane
8/28/17* $2.03 $2.73 $2.34
10/2/17 $2.23 $2.87 $2.49
10/9/17 $2.22 $2.85 $2.52
10/16/17 $2.21 $2.84 $2.54
10/23/17 $2.22 $2.85 $2.57
10/30/17 $2.27 $2.89 $2.58
11/6/17 $2.31 $2.93 $2.61
11/13/17 $2.37 $2.99 $2.62
11/20/17 $2.42 $2.99 $2.62
11/27/17 $2.44 $3.05 $2.62

*prices just prior to Hurricane Harvey

Maine Retail Heating Fuel Prices, as of November 27, 2017


Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

2.44

2.42

2.42

2.46

2.42

2.54

High

2.72

2.65

2.60

2.72

2.67

2.55

Low

2.20

2.23

2.20

2.30

2.20

2.50

Kerosene

3.05

3.06

3.05

3.05

3.03

3.10

Propane

2.62

2.73

2.64

2.52

2.56

2.57

These price increases are similar to those observed nationally, illustrated in the two tables below.

This upward trend in prices observed over the last few months reflect the confluence of several factors, including increased global demand for petroleum, a declining worldwide crude oil surplus, OPEC’s efforts to curtail production by its member countries as well as Russia, current production by North American shale oil producers, and increased U.S. propane exports². As the two graphs below indicate, U.S. inventories of distillates (heating oil and diesel) and propane, while remaining in the five year range, are significantly lower than this time last year.

However, despite OPEC’s recent attempts to reduce excess crude oil inventories, continued higher market prices will likely incentivize additional production by shale oil producers. Thus, it is less certain whether or not these higher market prices will be sustained.

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 Btu³

Fuel Price (in dollars) Fuel Price (dollars per million Btu)
Cord Wood ($250/cord) $11.36
Natural Gas ($1.47/therm) $14.73
Wood Pellets ($258/ton) $15.64
Heating Oil ($2.43/gallon) $17.52
Kerosene ($3.05/gallon) $22.59
Propane ($2.62/gallon) $28.69
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 $2.72, and the lowest heating oil price found was $2.20. 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 https://www.eia.gov/petroleum/weekly/archive/2017/170908/includes/analysis_print.php
² https://www.bloomberg.com/news/articles/2017-11-27/opec-battle-with-u-s-for-oil-supremacy-nears-day-of-reckoning ; https://www.eia.gov/petroleum/weekly/distillate.php ; https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mprexus2&f=m
³ 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