Residents who heat homes with propane, heating oil could see bills drop 30 percent this winter
JAMESTOWN, N.D. -- Rural residents using propane or heating oil to heat their homes could save more than 25 percent on their heating costs this winter, according to Tim Hess, a petroleum market analyst for the Energy Information Agency. "It is lo...
JAMESTOWN, N.D. -- Rural residents using propane or heating oil to heat their homes could save more than 25 percent on their heating costs this winter, according to Tim Hess, a petroleum market analyst for the Energy Information Agency.
“It is looking better for consumers than last year,” he said.
A combination of lower prices and a forecasted warmer-than-normal winter by the National Oceanic and Atmospheric Administration could save those who heat with heating oil as much as 30 percent this winter. The long-term NOAA forecast calls for much-above-normal temperatures for North Dakota through March.
Hess said heating oil prices are down about 20 percent from last year and forecasters are anticipating a 10 percent reduction in heating needs due to the warmer weather.
“The story for propane is largely the same,” Hess said. “Users of propane should spend about 25 percent less than last year.”
Mike Rud, president of the North Dakota Petroleum Marketers Association and executive director of the North Dakota Propane Gas Association, credits the fall and early winter weather with increasing the propane inventory.
“The supply nationwide is up 30 percent,” he said. “It was a real slow season for propane use nationwide (this fall) with little corn-drying activity.”
Good fall weather allowed corn to dry in the field rather than be harvested with a high moisture content requiring drying before it could be stored in a bin.
Propane prices spiked at more than $5 per gallon on short supply during the winter beginning in 2013. Since then, distributers have added additional capacity in North Dakota, largely relying on rail transportation to bring the product to the state, Rud said.
Rud said heating oil now comprises only a small percentage of the home-heating market in North Dakota with most homes already switched to propane or natural gas, where available. That has helped improve inventories of diesel fuel in the area.
“The refineries ramped up to deal with the expected demand from the Oil Patch,” Rud said. “That’s slowed down. It’s one of those things where there is a lot (of diesel fuel) hanging around.”
Gasoline inventories are also high based on increased production at regional refineries.
“Relatively cheap crude oil and very high levels of refinery runs have put more product on the market,” Hess said. “The demand for gasoline is strong, but the diesel demand is down. Diesel inventory is very high relative to demand.”
Hess said there are no guarantees the current prices will continue.
“There is a whole host of things that can cause problems,” he said. “Supply disruptions could cause prices to go up. A cold snap could cause a price rise, but the high levels of inventory for propane and heating oil should insulate the consumer against that.”
Rud also thought energy prices could ultimately rise.
“Things change,” he said. “Enjoy what’s happening right now.”