Heating fuel costs may fall this winter, but predictions for colder winter negate savings

Posted Aug. 31, 2012, at 5:11 p.m.
Last modified Aug. 31, 2012, at 7:18 p.m.

AUGUSTA, Maine — The price for heating fuel increased by about 32 cents per gallon in the past two months, according to Gov. Paul LePage’s Energy Office, but a draft report from the federal government says heating oil prices will be slightly lower this winter than last year.

The price for No. 2 heating oil on Aug. 30 was $3.59 per gallon, according to a statewide survey conducted by the Governor’s Energy Office. This is the first summer the state has monitored heating oil prices, adding to the body of weekly data it collects each year from October through March.

Because this is the first year summer surveys have been conducted, direct comparisons to last year are impossible. But heating oil cost $3.52 per gallon in October of last year, the closest date on record to last August.

Numbers on the efficacy of No. 2 heating oil versus natural gas continue to be staggering, with heating oil about eight times less efficient than natural gas. Energy Office data state that oil is rated at $22.60 per million Btu compared with natural gas, which is about $2.71 per million Btu.

The U.S. Energy Information Administration predicts heating oil prices will be 4 percent lower this year than last year, while propane prices may be 19 percent lower than last winter. But Michael Barden, senior planner with the Energy Office, says those numbers should be taken with a grain of salt.

“Their draft has a confidence interval of 95 percent,” he said, meaning the administration is 95 percent certain their prediction is accurate. “But the range is $50 to $165. … That doesn’t give you much confidence, does it?”

While the Energy Information Administration numbers are far from perfect, Barden said they are the best available, as the administration keeps tabs on refinery production, international economies and geopolitical factors that all affect the price of heating oil.

Even if the price of heating oil drops compared with last year, it may not matter, according to predictions from the National Oceanic and Atmospheric Administration. NOAA predicts the 2012-2013 winter will be about 18 percent colder than last year’s remarkably mild season. The Farmer’s Almanac also predicts a cold, snowy winter.

“That colder winter would more than negate any price drop in heating fuel,” Barden said.

Heating oil peaked at $3.86 per gallon in February and March last year, the highest since 2004.

Follow Mario Moretto on Twitter at @riocarmine.

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