Average home heating oil prices
December, 2013 — $3.72
March, 2014 — $3.75
June, 2014 — $3.51
September, 2014 — $3.32
December, 2014 — $2.75
Source: Governor’s Energy Office
For more information, go to www.maine.gov.
JAY — Like a lot of Mainers, last year’s high fuel costs and cold winter motivated homeowner Dan Ryder to weatherize his residence.
He had an energy audit done, then carried out the audit’s recommendations, hiring Upright Frameworks to insulate his attic and basement.
Once the insulation was in, “you could feel the heating staying,” Ryder said. “We are saving hundreds of dollars, if not thousands.”
Even in a market that’s dramatically cheaper than one year ago.
On Tuesday, the statewide average price for home heating oil was $2.75 per gallon, according to the Maine Governor’s Energy Office. That price seemed high in comparison with the price of oil being sold by local dealers.
One year ago, the statewide average was $3.72, 93 cents more than the current state average.
“Heating fuel prices rise again as wintry weather descends on the state,” read a headline from a Governor’s Energy Office 2013 news release.
Since then, oil prices have gone from climbing to diving.
Tuesday’s statewide average was four cents lower than it was on Dec. 23. That price was seven cents lower than on Dec. 16, which was seven cents lower than on Dec. 9.
As homeowners know, the energy market is volatile. But even the experts didn’t expect oil prices to drop as much as they have.
“There is a tremendous amount of supply,” said Jamie Pye of Maine Energy Marketers Association, formerly the Maine Oil Dealers Association.
World crude oil prices are the lowest in five years, according to the Governor’s Energy Office. Current estimates of oil production indicate that supply exceeds demand by two million barrels a day, and United States inventories are at their highest levels since the early ’80s.
The market is responding with lower prices.
In the past year, there has been a massive supply of both natural gas and oil generated in the United States. A lower worldwide demand for oil, including in the United States, is causing Saudi Arabia to cut their revenue expectations.
New technology with horizontal drilling has allowed oil and gas companies to reach domestic supplies that were unattainable five years ago, Pye said.
“It used to be wells were drilled straight down,” Pye said. “Now they’re able to drill at 90-degree angles; that’s horizontal drilling. It allows more oil to be drawn out.”
States like New York, North Dakota and Texas are producing more gas and oil.
“That’s transformed the landscape,” Pye said.
Adding to that, this year’s weather is milder. A year ago, much of the nation was in a deep freeze, which gave heating budgets a beating.
“Last year, we had the perfect storm of high prices, cold weather and not enough planning for propane gas,” Lisa Smith of the Governor’s Energy Office said. “This year, it looks much rosier. It’s been warmer than normal. The global price war is going on. Mainers are benefiting with significantly lower prices. For once, Mainers are paying less for heat.”
Smith estimates Mainers who heat with oil are saving $700 from last year’s season, “and that does not include the milder winter we are having,” she said. “If the temperatures dip in January and February, these savings may disappear. But there is no doubt that Mainers are spending significantly less to heat this winter.”
Numbers aren’t available for how much less oil Mainers are using this year, but experts say fewer homeowners continue to heat with oil.
In the past nine years, the amount of Maine homes heated with oil dropped from 80 percent to 64.2 percent, Smith said. Twenty-five years ago, the typical Maine home burned 1,200 gallons of oil each year, Pye said, adding that the average is now down to 750 gallons.
“That’s significant,” Pye said.
More Mainers are making energy improvements. Others are switching to alternative heat, such as propane gas, natural gas, heat pumps and burning wood or wood pellets.
The Governor’s Energy Office is pleased with the trend of weatherizing and diversifying.
“If you have all your eggs in one basket, you’re stuck,” Smith said. “Mainers are fairly astute.” When a home has more than one fuel source, “they’re poised to take advantage of the least expensive source,” she said.
It’s tough to know which form of energy is the best deal, since prices on all energy sources fluctuate. The best way to save money, experts say, is to insulate — the attic, basement and cracks in the home around chimneys, foundations, doors and windows. No matter what heating system is used in a home, adding insulation will save fuel and money.
The trend of prices spiking and dropping has happened before, and will likely happen again, experts say. In 2008-09, the price rose to $3.50 a gallon, then tumbled down to $2, Smith said.
Between Mainers spending less to fuel their vehicles and heat their homes, the lower prices are a gift, Smith said, adding that it’s anyone guess how long they’ll be around.
“Enjoy the ride while it lasts,” she said.
Tomorrow: Lower gas prices are generating smiles at the pump.
Some locked into higher prices
LEWISTON — Some homeowners have signed up for packages with their oil dealer that caps how high the price can go, but gives them current prices on deliveries.
For instance, Dead River Co. offers an EasyCAP plan, which capped the price at $3.59 a gallon. The company is now delivering oil at $2.59.
Others consumers essentially bought the oil when the price was higher with price-protection plans, which is now locking them out of current lower prices, said Jamie Pye, president of the Maine Energy Marketers Association.
“It depends on your contract,” Pye said. “Generally speaking, you gave me money to buy oil, I bought the oil” to protect against the price going up. The oil dealers are locked into the price they paid for the oil and deliver throughout the winter, Pye said.
“If the price spikes, you’ve already bought the oil,” he added.
Some customers are asking if they can get lower prices.
“There’s nothing wrong with people asking,” Pye said. But price protection contracts have been going on long enough “that customers know, ‘I made a deal; I bought the oil.’ Who knew it would be $1 less?”