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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12 DECEMBER 2016 | FUEL OIL NEWS | www.fueloilnews.com FUELS EIA NE WS since September. Ian Ronald, CEO of BoilerJuice, said, "Whilst the recent price rise has been dramatic, heating oil still represents the cheapest form of energy available after historic price lows earlier in 2016. We do recognize times are uncertain for heating oil users, and we will continue to work hard for customers to provide the best price, service and convenience through our nationwide network of selected local suppliers." The last time prices increased to these levels (December 2010), suppliers were struggling to make deliveries as blizzards caused chaos across the U.K. This time around, BoilerJuice said, prices have soared due to recent world events: the weakened Pound Sterling follow- ing the U.K. referendum result to exit the European Union; and speculation that many major oil producers, in particular Russia, were open to striking a deal with OPEC to reduce oil output. Considering that heating oil prices increased sharply following speculation around the last OPEC meeting where the organiza- tion reached an "agreement to agree," it is reasonable to assume that prices could increase further before the next OPEC meeting takes place on Nov. 30, BoilerJuice said. It said many traders have speculated prices rising above $65 per barrel in 2017. BoilerJuice, based in St. Ives, England, operates an indepen- dent heating oil website designed to provide the cheapest price from a nationwide network of local and national suppliers. More than one million orders have been placed with the website since the business was founded in 2004, BoilerJuice said. EIA WINTER FUELS OUTLOOK: HEATING BILLS LIKELY TO RISE, BUT STAY BELOW THOSE OF RECENT WINTERS Most U.S. households can expect higher heating expenditures this winter (October through March) compared to last win- ter, according to EIA's Winter Fuels Outlook. Winter heating expenditures for most fuels were especially low last winter, when energy prices were relatively low and warm weather reduced heating demand to the lowest level nationally in at least 25 years. Although expenditures for nonelectric fuels are expected to be higher than last winter, expenditures are comparable to or lower than the average winters from 2010–11 through 2014–15. By comparison, electric heating prices and expenditures are expected to remain relatively stable. EIA considers the winter season to run from October through March. The average household winter heating fuel expenditures discussed [here] are a broad guide to changes compared with recent winters. Fuel expenditures for individual households are highly dependent on the size and energy efficiency of individual homes and their heating equipment, along with thermostat set- tings, local weather conditions, and market size. Temperatures this winter, based on the most recent fore- cast of heating degree days (from the National Oceanic and Atmospheric Administration (NOAA), are expected to be much colder than last winter east of the Rocky Mountains, with the Northeast and Midwest 17% colder and the South 18% colder. Despite the expectation of colder temperatures compared with last winter, temperatures in the eastern United States are expected to be about 3% warmer than the average of the five winters preceding last winter, as temperatures last winter were much warmer than normal in those areas. In the West, tem- peratures are forecast to be about 2% warmer than last winter. However, recent winters provide a reminder that weather can be unpredictable. In addition to the base case, the Winter Fuels Outlook includes forecasts for scenarios where heating degree days in all regions may be 10% higher (colder) or 10% lower (warmer) than forecast. In the United States, households that rely primarily on heat- ing oil for heating purposes are most prevalent in the Northeast region. EIA expects households heating primarily with heating oil to spend an average of $378 (38%) more this winter than last winter, reflecting retail prices that are $0.42/gal (20%) higher and consumption that is 15% higher. Despite the higher forecast expenditures, expected average household heating expenditures this winter are about 32% lower than in the five winters prior to last winter. In the 10%-colder-weather scenario, projected expen- ditures are $556 higher than last winter, with prices that are $0.50/gal (24%) higher than last winter and consumption that is 25% higher. Reliance on heating oil is highest in the Northeast, where about 22% of households use oil for space heating, down from 27% five years ago as an increasing number of homes switch to using natural gas and electricity for space heating. Nationwide, 5% of households use heating oil. Heating oil prices are expected to be higher than last winter because of crude oil prices which are forecast to be 24% higher than last winter. The Brent crude oil price, which is the crude oil price most significant in determining U.S. petroleum product prices, is forecast to average $48/b this winter, which would be $9/b (22 cents per gallon) higher than last winter. Brent crude oil prices are forecast to be higher than last year as a result of gradually tightening global oil supply balances. Despite being higher than last winter, crude oil prices are still forecast to remain below levels seen from 2010-14 as the global oil market continues to move towards balance. However, crude oil prices are highly uncertain, and any deviation in crude oil prices from forecast levels would cause a similar deviation in retail heating oil prices and consumer expenditures.