Oil heated homes enjoying lower prices
October 5, 2015
|Homeowners can expect lower heating prices both short and long-term.(Alexandria,VA, October 5, 2015)
Homeowners who heat their houses with heating oil will see lower prices this winter and for the foreseeable future. Dramatic increases in production combined with ample and increasing inventories have driven the price of home heating oil down to levels not seen in years.
Prices have dropped across the entire heating oil marketing footprint. Heating oil closed on the NYMEX this past Friday, October 2 approximately 15% lower than the same time last year and almost half the price at the close of October 4, 2013-just two years ago.
According to the New York State Energy Research and Development Authority (NYSERDA), heating oil prices state-wide on September 14, 2015 are lower by $1.20 per gallon than the same time last year, a 31.9% reduction. New York is the largest heating oil consuming state.
Maine, the state with the highest percentage of oil heated homes, is showing an average state-wide price of $1.99 per gallon on September 21, the lowest heating season price recorded for the last ten years.
These reduced prices can add up quickly for homeowners. With an average annual heating oil usage of 750 to 800 gallons, a homeowner’s savings can approach $1,000 for the year.
John Huber, President of the National Oilheat Research Alliance, stated:
Two prime movers forcing the drop in prices are increased production and full inventory stocks. With the United States now the world’s leading petroleum producer, production in 2014 showed a 34.6% increase over 2012 and the first seven month of 2015 show an increase of 11.5% over 2014. The combination of increased shipments from the Gulf Coast, higher refinery runs and imports have boosted East Coast distillate inventories to 5.4 million barrels above the five-year average for the week ending September 11, the highest since 2011. On September 18, the distillate inventory was at 59 million barrels.
Homeowners don’t have to rely solely on lower prices to reduce their heating costs. Proper maintenance and tune-ups of their heating system can save from 5 to 10% and upgrading an older heating system to a new high-efficiency system may save 30% and even more in some cases.
Heating oil, a type of distillate fuel oil, is used as a space heating or water heating fuel in about eight million U. S. households.
NORA was authorized by Congress in 2000 to provide funding that would allow the Oilheating industry to provide more efficient and more reliable heat and hot water to the American consumer. The four key arms of NORA are Consumer Education, Professional Education, improving Energy Efficiency and Safety, and Research.
|For more information about NORA and its programs or services, call 703-340-1660 or visit the web site, www.NORAweb.org
Article credit: Don Farrell
WSJ weights in on impact of low heating oil prices
January 21, 2015
By Jon Kamp
(WSJ) — On top of the broad savings Americans are reaping from cheaper gasoline, plummeting oil prices stand to bring residents in the Northeast billions more dollars in savings this winter when they fill up their home-heating-oil tanks.
An estimated 6.2 million U.S. homes rely on heating oil for seasonal warmth, the vast majority in the Northeast. The region—stretching from Maryland to Maine—accounts for about 87% of the heating fuel’s use, according to federal data. The fuel is delivered by truck and pumped into storage tanks, which are often in the basement.
Heating a house with oil has been much pricier than using natural gas for several years, imposing a burden on homeowners who can easily burn through 1,000 gallons of oil every winter. But as the price of crude falls world-wide, the current average price for heating oil in the U.S. has dropped $1.10 from a year ago to under $3 a gallon for the first time in more than four years, the U.S. Energy Information Administration said.
Based on average wintertime consumption, a dollar per gallon in savings over the whole heating season could mean roughly $3 billion in savings for Northeast residents, said Chris Lafakis, a senior economist at Moody’s Analytics.
This translates into hundreds of dollars in savings with each heating-oil fill-up, providing some relief for people who struggle to pay energy bills. Dorothy Perkins, a 65-year-old retiree in coastal Lamoine, Maine, estimates she and husband Gary, a part-time Wal-Mart worker, had to pay more than $4,000 to keep their furnace humming last winter.
This was despite closing off some rooms and huddling under blankets as their thermostat was set at just 60 degrees. Her sister, overwhelmed by high energy costs, had to come by temporarily with her two cats. “It was a struggle,” Mrs. Perkins said. “I don’t know many people that have that much money.”
Indeed, heating-oil costs remain a hardship for many residents in the region despite the drop. The Washington Hancock Community Agency in Maine, a nonprofit group that helps provide heating assistance, is getting as many calls as ever for help, especially as the weather turns colder, Executive Director Mark Green said.
The situation in Maine is particularly acute as no state relies more on heating oil. The state, which has limited pipeline access to natural gas, has nearly two-thirds of its homes using oil and other “combustible liquids” for warmth, according to federal census data.
The steep decrease in prices is also largely good news for regional oil dealers, which are often small, family-owned businesses that have lost business to an expanding web of natural-gas mains for decades. Lower prices mean paying less to fill trucks and better odds that customers can pay bills on time, said Michael Ferrante, president of the Massachusetts Energy Marketers Association, which represents heating-oil firms in the state.
While federal data show natural gas remains a cheaper fuel nationwide, in pipeline-constrained Maine, gas on average is actually more expensive now for residential customers, once oil prices are converted into a comparable unit of measurement, according to Republican Gov. Paul LePage ’s energy office.
The most recent Maine numbers show average heating-oil prices of $2.63 a gallon, down $1.18 from a year ago. The slide is linked to declining prices due to rising global production and modest demand growth.
Privately held Lincoln Paper & Tissue LLC in central Maine switched to gas instead of heating oil to run drying equipment in 2012, but has the ability to switch back if oil becomes cheap enough, said Keith Van Scotter, the company’s chief executive. The plant makes dyed napkins commonly sold in party stores.
Elsewhere in Maine, suddenly lower oil prices may cool consumers’ appetite to switch fuels, at least for now. “We saw the sign-up rate start to drop off when oil prices started to drop,” said Dan Hucko, a spokesman at Iberdrola USA’s Maine Natural Gas, a small utility there.
Gas utilities in Massachusetts, Connecticut, New York and Pennsylvania said they haven’t yet seen that effect. Mr. Lafakis, the Moody’s economist, said natural gas is still a better pricing bet for homeowners over the long haul. Gas is steadily helping replace heating oil overall.
Oil users will enjoy the ride while it lasts. “It’s fantastic knowing that the price has gone down,” said Mrs. Perkins, the Maine resident, who topped off with 129 gallons on Monday to take advantage of low prices. “But it’s not going to stay.”
Heating oil prices: How low will they go?
December 18, 2014
Oil prices have been continuously dropping, 18.6% from last year. This is hugely different from the estimate that the Energy Information Administration predicted for this winter of 15%. Not only that, but the current cost of oil is $68 per barrel (nearly $40 less per barrel as a few months ago) and could go as low as $50.
Why so low?
The current state of oil has a lot to do with this. The reason for the dropping of the price of oil is due to rising supply and increasing price competition. In the U.S., we have increased our production in North Dakota, taking pressure of OPEC. OPEC has also decided at the end of November that they will NOT be making production cuts which would have increased prices if they decided to make those cuts.
Pennsylvania’s Oil Costs
On average, Pennsylvania’s average heating oil price this December is $2.999 versus last year at $3.683. Just with in the last month the price on November 4 was between $2.99 – $3.349 to December 4 was $2.339 – $2.399.
What does this mean?
There has been a tremendous pressure lifted from both heating oil customers and the heating oil companies. Last winter, many of these companies carried debt for months in order to give their customers affordable monthly payment plans.
The Energy Information Administration has predicted that between Oct. 1 2014 and March 31, 2015 there would be a price drop for home heating oil of 15%, 27% for propane, 5% for natural gas, and 2% for electric. On the other hand, if the winter happens to be 10% colder than predicted, oil prices will only drop 5%, propane would decrease 15%, natural gas would increase 6%, and electric would increase 2%. Although this is all good news, the cost of oil now is still higher than the last five years averaged together.
EIA predicts Oilheat Homes to Pay Less for Heat
November 4, 2014
During the Winter Energy Outlook Conference in Washington D.C., industry representatives and energy experts came together to see what would affect the energy markets this year domestically and abroad. In this meeting, these members predicted a decline in heat costs for several reasons:
Domestically, there are pipeline and infrastructure developments throughout the U.S. driving down the price of domestic oil, as well as affecting shale oil internationally. Geopolitical pricing premiums for crude oil have shrunk because of liquidating positions, as well as a decrease in the amount of oil traded on ICE Brent, decreasing 75% from its peak last year. All of these reasons have been driving down oil prices.
The GDP growth in 2015 seems to be slowing. An August revision cuts the 2014 outlook by 10 basis points to 2.8%, and 2015 global growth is predicted to move from 3.4% to 3.5%. Europe and Japan especially are expected to expand quantitative easing programs, with growth more than likely struggling in major economies in the coming year. Additionally, the Middle East, South Asia, and former Soviet Union are building new refineries which put additional pressure on the refinery margins.
Weather Forecasts and Consumption:
The Conference predicts a decrease in consumption this year, as well as a decrease in retail price. They estimate heating oil will drop 15%, or $362 on average, less than last year. If the temperature raises another 10% over last winter, expect prices to drop closer to 24%.
Environmental and Efficiency Improvements:
There has been a push to make things more economical and efficient in the Northeastern states by moving to a low-sulfur heating oil product. This will, in turn, make a switch to long-term improvements to heating equipment. By increasing the blends of heating oil and renewable biodiesel, greenhouse gas emission reduces and there is an increase in long-term solutions to renewable fuel for American customers.