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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EI A o u t l o o k EIA Short-Term Energy and Winter Fuels Outlook Swings moderate, but Oil to be cheaper and natural gas more expensive by Keith Reid Short-Term Energy and Winter Fuels Outlook on October 8. Overall, EIA projects average U.S. household expenditures for natural gas and propane will increase by 13 percent and 9 percent, respectively, this winter heating season (October 1 through March 31) compared with last winter. Projected U.S. household expenditures are 2 percent higher for electricity and 2 percent lower for heating oil this winter. Although EIA expects average expenditures for households that heat with natural gas will be significantly higher than last winter, they are still lower than the previous 5-year average. This data came out too late to be included in Fuel Oil News' winter fuel outlook that ran in October. It is in general alignment with the industry experts cited in that article. We noted that while this should be a better year than the industry has seen recently it probably would not be an extraordinarily good year. The weather could shift that to some extent. Offered below are some editorially organized highlights pulled directly from the report. One point to note is that our experts in last month's article tended to reference wholesale prices and this report tends to reference retail prices (unless otherwise noted). Projected Winter Fuel Expenditures by Fuel and Region The average household winter heating fuel expenditures discussed in the STEO provide a broad guide to changes compared with last winter. However, fuel expenditures for individual households are highly dependent on local weather conditions, market size, the size and energy efficiency of individual homes and their heating equipment, and thermostat. Forecast temperatures are close to last winter nationally, with the Northeast about 3 percent colder and the West 3 percent warmer. Heating Oil and Diesel EIA expects households heating primarily with heating oil to spend an average of about $46 (2 percent) less this winter than last winter, reflecting a 5 percent decrease in prices and a 3 percent increase in consumption. Although winter temperatures are expected to be similar to last winter nationally, weather in the Northeast is expected to be 3 percent colder than last winter. Reliance on heating oil is highest in the Northeast, where about 25 percent of households depend on heating oil for space heating, compared with 6 percent of households nationally. The state of New York, which accounts for about one-third of the region's heating oil market, has required the use of ultra-low sulfur heating oil since July 2012. 22 NOVEMBER 2013 | FUEL OIL NEWS | www.fueloilnews.com A number of other states will begin to move away from higher-sulfur heating oil in the coming years. Biodiesel production (relative to Bioheat©), which averaged 63,000 bbl/d (1.0 billion gallons per year) in 2012, has been rising this year and reached a record level of 128 million gallons (98,000 bbl/d) in July 2013. Biodiesel production is forecast to average about 82,000 bbl/d in 2013 and 87,000 b bl/d in 2014. Diesel fuel prices, which averaged $3.97 per gallon in 2012, are projected to average $3.93 per gallon in 2013 and $3.76 per gallon in 2014. Propane About 5 percent of all U.S. households heat with propane. EIA expects households heating primarily with propane to spend more this winter, but the projected increase varies across regions. EIA expects that households heating with propane in the Midwest will spend an average of $120 (9 percent) more this winter than last winter, reflecting prices that are about 10 percent higher and consumption that is 1 percent lower than last winter. Households in the Northeast are expected to spend an average of $206 (11 Price Summary 2011 2012 2013 2014 WTI Crude Oila (dollars per barrel) 94.86 94.12 98.69 96.21 Brent Crude Oil (dollars per barrel) 111.26 111.65 107.96 102.21 Gasolineb (dollars per gallon) 3.53 3.63 3.52 3.40 Dieselc (dollars per gallon) 3.85 3.97 3.93 3.76 Heating Oild (dollars per gallon) 3.66 3.79 3.77 3.62 Natural Gasd 11.03 (dollars per thousand cubic feet) 10.66 10.76 11.90 Electricityd (cents per kilwatthour) 11.88 12.16 12.33 a West Texas Intermediate. b Average regular pump price. c On-highway retail. 11.72 d U.S. Residential average. Source: EIA Roof image ©istockphoto.com/sttz T he Energy Information Administration released its annual