The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding
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A variety of factors go into determining whether a heating season is good for the industry or not so good. With heating fuel, price tends to have an impact on volume with some people turn- ing down the thermostat as the cost to fill the oil tank moves up. And then you have the weather. The more days that are cold enough to require heating and the colder the weather during those days, the more gallons that are typically consumed. This is conventional wisdom and is cer- tainly true at a foundational level. The term "Polar Vortex" has been thrown around quite a bit lately, but regardless of the tag line NOAA heating de- gree day calculations show that the last two heating season have been significantly colder than normal, with this year's heating season being slightly less extreme than 2013-2014. For those not in the know, which should be very few Fuel Oil News readers, EIA defines a HDD as: A measure of how cold a location is over a period of time relative to a base temperature, most commonly specified as 65°F. The mea- sure is computed for each day by subtracting the average of the day's high and low temperatures from the base tem- perature (65°), with negative values set equal to zero. Each day's heating degree days are summed to create a heating degree day measure for a specified reference period. Heat- ing degree days are used in energy analysis as an indicator of space heating energy requirements or use. The National Oceanic and Atmospheric Administration typically pulls data from daily temperature observations at nearly 200 major weather stations to determine HDD data for the United States. While 2014-2015 heating season was slightly less extreme nationally than the previous season, if you look at HDD data regionally then 2014-2015 was slightly more extreme for those in the Northeast. As the Washington Post recently noted, much of the highly populated northeastern United States had one of its top three coldest first quarters of the year in records dating back to 1895. For example, looking at NYSERDA data for New York between July 1, 2014, and March 18, 2015, there were 6,261 HDDs compared to 6,256 for the same period in the preced- ing heating season. The "normal" for comparison is stated to be 5,706. The cost of heating oil had little in common between the two heating seasons. Prices were still astronomical going into the 2013 season but had plummeted and stayed rela- tively suppressed moving into the 2014 season. According to EIA the average family heating cost with oil dropped from $2,355 to $1,784 respectively. This should have resulted in consumers being a little less frugal with the thermostat 2014-2015. All in all, EIA data would support more gallons have been 42 JUNE 2015 | FUEL OIL NEWS | www.fueloilnews.com BUSINESS OPERATIONS Colder Winters and Fuel Volumes More gallons will be sold when the weather turns colder than average, but maybe not as many as anticipated BY KEITH REID