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
Issue link: https://read.dmtmag.com/i/752478
FUELS EIA NE WS 14 DECEMBER 2016 | FUEL OIL NEWS | www.fueloilnews.com draws given colder weather, higher crop-drying use, or stronger exports. With the addition of new export facilities over the past several years, and a new Gulf Coast terminal expected to begin operations later this month, the United States has the capacity to support higher-than-forecast levels of propane exports when spot shipments are economically viable. Inventories on the Gulf Coast have been the main contribu- tor to the record-high storage levels, with propane inventories in that region 55% above the previous five-year average for the week ending September 30. Much of this storage is at facili- ties connected to industrial users and export terminals, and transport of the propane to the Midwest and Northeast is often costly. However, propane inventories in the Midwest and Northeast are 9% and 42% above the five-year average, respectively, as of September 30. Higher inventory levels and improved rail delivery networks for propane should contrib- ute to more robust propane supply chains than three years ago, when the Midwest saw prices spike during extremely cold weather. However, local markets could still see tight supply conditions, particularly in cases of severely cold temperatures. The number of households using cord wood or wood pellets as the primary residential space heating fuel has increased by 26% since 2005, to about 2.5 million households in 2015. About 8% of households use wood as a secondary source of heat, making wood second only to electricity as a supplemental heating fuel. About 20% of homes in New England (1.1 million) used wood for space heating, water heating, or cooking in 2009, according to the EIA's 2009 Residential Energy Consumption Survey, which is nearly twice the national rate. Almost half of all rural households in New England used wood, compared with only 12% of the region's urban households. Nearly half of all U.S. households heat primarily with natural gas. EIA expects households heating primarily with natural gas to spend $116 (22%) more this winter compared with last winter. However, forecast average expenditures of households heating with natural gas this winter will be comparable to those in the five winters prior to last winter. The increase in forecast expenditures compared with last winter is driven by compara- tively similar increases in price and consumption. Residential natural gas prices are forecast to average $10.37 per thousand cubic feet (Mcf), 11% higher than last winter. Prices at this level would be the highest since the winter of 2010-11. Consumption is forecast to be 10% higher than last winter. The increase in consumption is based on a return to tem- peratures that are closer to normal following last winter's El Nino weather pattern that resulted in winter temperatures that were 15% warmer than the previous ten-year average nationally. Although forecast residential natural gas prices are 11% higher than prices last winter, Henry Hub spot prices are expected to average $3.16 per million British thermal units (MMBtu) ($3.26/ Mcf), which would be 53% higher than last winter. Higher natural gas prices reflect falling natural gas production during 2016 and increased use of natural gas for electricity generation. Changes in spot prices do not quickly translate into changes in delivered resi- dential prices. The rates utilities charge for delivered natural gas can be set by state utility commissions a year or more in advance and reflect the cost of natural gas purchased over many months. Also, residential prices include charges to cover utility operating costs and the cost to transport and distribute natural gas that are not directly linked to wellhead prices. Under a 10% colder scenario, EIA projects natural gas- related heating expenditures to be 31% higher than last winter and 7% higher than the base case. In that scenario, consumption and prices are 19% and 10% higher than last winter, respec- tively. Under a 10% warmer scenario, EIA projects expenditures to be 12% higher than last winter. EIA projects natural gas inventories will total 3,966 billion cubic feet (Bcf) at the end of October, which would be near a record high going into the heating season. Last winter's warm weather left natural gas inventories at record high levels in April, the beginning of the refill season. l F O N Source: EIA Winter Fuels Outlook Parts | Repair | Testing | Calibrations Inspections - DOT | Annual (V&K) and 5 year Sandblasting & Painting