Global Demand High, Supply Risks Present, and an Oil Refinery Explosion - A Busy News Week Affects Maine's Heating Fuel Prices

October 10, 2018

Augusta, Maine - The Governor's Energy Office (GEO) conducted its weekly heating fuel price survey on Tuesday, October 9, 2018, and found the current statewide average cash price for No. 2 heating oil was $2.96 per gallon, up 8 cents from just a week ago.  The average statewide kerosene price is up 10 cents, to $3.55 per gallon.  The statewide average propane price has also climbed six cents, to $2.83 per gallon (for heating customers).  As the table below indicates, heating fuel prices have increased 5 to 7 percent since mid-September.  The table below summarizes averages prices over the last several weeks.

Date Maine Average Retail Fuel Prices,
per Gallon
Heating Oil Kerosene Propane
9/10/18 $2.77 $3.36 $2.69
9/17/18 $2.78 $3.37 $2.71
9/24/18 $2.80 $3.39 $2.73
10/1/18 $2.88 $3.45 $2.77
10/9/18 $2.96 $3.55 $2.83

There are several events, both global and one more local, which may account for the continued rise in prices.  Today, the U.S. Energy Information Administration (EIA) released its annual Winter Fuels Outlook for 2018 https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf .  In its forecast, the EIA, using weather forecasts from the National Oceanic and Atmospheric Administration (NOAA), predicts higher fuel prices, but was noncommittal on the issue of colder-than-normal weather or above average precipitation for the eastern half of the country, including the Northeast.  NOAA predicts a roughly equal chance that temperatures will be average, higher-than-average, or lower-than-average. The same prediction holds for precipitation amounts - equal chance of average, higher-than-average, and lower-than average.  Based on this equal chance forecast, the EIA is not expecting heating fuel consumption to be higher than a normal heating season.

Prices, however, are expected to be higher - global demand is high, and several oil-producing countries, known in energy markets as the "Fragile Five" (Iran, Iraq, Libya, Nigeria, and Venezuela), are in political or economic turmoil.  Stable oil production in these countries is at risk, and this is causing prices to rise.  Because of these supply risks, the EIA predicts heating oil prices to be in the $3.27 per gallon range for the winter of 2018-19, almost 18 percent higher than last year.  Below is a graph depicting EIA's price forecast, nationally, for the upcoming winter heating season.

Added to all the global events impacting prices is a local one - an explosion that occurred at the Irving Oil Refinery in St. John, New Brunswick on Monday, October 8th https://www.pressherald.com/2018/10/08/explosion-shakes-irving-refinery-in-new-brunswick/ . This is relevant to Mainers, as the state obtains significant amounts of gasoline, diesel and heating oil from the New Brunswick refinery. Energy Office Director Angela Monroe spoke with Irving officials and the Maine Energy Marketers Association regarding the impacts from the explosion. "Irving Oil does not expect any broad-based supply issues as a result of the incident," said Monroe. "It is our understanding that Irving had just completed refinery runs and inventories were full prior to ceasing operations for scheduled maintenance, which was ongoing at the time of the explosion. In addition, Irving already had contingency plans in place to replace supplies unavailable during the maintenance period, and those contingency plans have been activated." The Energy Office will continue to communicate with Irving and monitor the situation.

Therefore, while tight supplies globally are causing heating fuel price increases at home, Mainers should not have problems getting fuel to fill their tanks.

Below is a table of prices collected for various regions of the state.

*Maine Retail Heating Fuel Prices, as of October 9, 2018


Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

2.96

2.93

2.96

3.02

2.89

3.09

High

3.32

3.15

3.15

3.32

3.15

3.10

Low

2.60

2.65

2.75

2.83

2.60

3.05

Kerosene

3.55

3.56

3.55

3.56

3.47

3.66

Propane

2.83

2.95

2.78

2.87

2.69

2.70

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 Btu (October 9, 2018)

Fuel Price (in dollars) Fuel Price (dollars per million Btu)
Cord Wood ($275/cord) $12.50
Natural Gas ($1.21-$2.21/therm)* $12.14-$22.14
Wood Pellets ($268/ton) $16.24
Heating Oil ($2.96/gallon) $21.34
Kerosene ($3.55/gallon) $26.30
Propane ($2.83/gallon) $30.99
Electricity - baseboard (14-17.5 cents/kwh) $42.50-$51.29
Electricity - air source heat pump (5.2-6.5 cents/kwh)* $15.24-$19.05

*price varies depending on location; natural gas and electricity delivery companies service only selected areas of the state.
**ductless, air source heat pump calculations courtesy of Efficiency Maine


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, are also important factors 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 $3.32, and the lowest heating oil price found was $2.60.   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