Some years, finding a good-news story about heating oil is as likely as discovering a purple unicorn grazing in Baxter State Park.
Then there’s this year. Behold, the unicorn:
If prices stay as they are this very minute, Mainers who heat with oil — and most do — will save big this winter.
By their best guess, officials say they expect low rates to last into next year.
It’s good news. On heating oil.
Really.
By one estimate out of the Governor’s Energy Office, residential consumers overall could save as much as $157 million over last winter and $323 million over the winter before — and that’s just on direct heating oil purchases.
And when there’s cheap heating oil, there’s also cheap gasoline: The price for a gallon of regular is $1.11 less now in Maine than this time last year. Barring international unrest, expect that to last for many months, too, according to the senior East Coast petroleum analyst for GasBuddy.com.
Jeff Pelton, 46, said he’s looking at gas prices in the coming months that he hasn’t seen since he was a 17-year-old driver.
“Christmastime gas prices, it’s going to be really good,” he said. “We should all get better gifts this year; put it that way.”
Short term, all that savings is “absolutely great news,” said Maine State Economist Amanda Rector. “It gives us more money that we can spend in other parts of the economy.”
It may mean a healthier retail sector this fall, paying down debts, more savings, more meals out and, potentially, an earlier start to construction next spring if winter doesn’t last too long and people feel good in the wallet.
‘Nobody saw this coming’
According to the U.S. Census, 68 percent of homes in Maine rely on heating oil or kerosene, the highest rate in the country.
“In the residential sector, we are still No. 1, unfortunately,” said Lisa Smith, senior planner in the Governor’s Energy Office, and the tracker of energy trends.
That reliance is down, at least, from a high of 80 percent not so long ago.
In 2013, Mainers bought 192.4 million gallons of heating oil, according to the U.S. Energy Information Administration.
The average price per gallon last winter, Smith said: $2.85.
The average price for the winter of 2013-14: $3.71.
The current, statewide average from a survey Smith released Monday: $2.03. It hasn’t been so low since March 2009.
Jamie Py, president of the Maine Energy Marketers Association, estimated that the average home uses 700 gallons of home heating oil each winter (also down, from 1,500 gallons 30 years ago.)
For an average homeowner, that savings over last year would be about $600, if pricing trends hold.
And it looks like they might.
From Smith: “All the signals are that it’s pushing down and might go even lower, which is actually incredible. North America is producing more than they ever have. Demand’s flat, they’re pumping out record levels of production, (at) record levels of storage. That’s just going to keep depressing prices.”
From Py: “The prices of heating oil, propane and even natural gas at this point, are probably going to be low for a long time, fundamentally, because of the massive amount of supply that’s out there.”
And from Prof. Jonathan Rubin at the Margaret Chase Smith Policy Center and School of Economics at the University of Maine: “They (the Energy Information Administration) are forecasting oil prices to stay basically at their current prices through the upcoming heating season. That means that fuel oil is going to stay quite, quite inexpensive.”
Due in particular to drilling in North Dakota and Texas, oil and petroleum imports are down from 60 percent of U.S. supply 10 years ago to 30 percent today, Rubin said. That’s kept the oil flowing, kept more money stateside and added to our energy security.
“Exploration is really being curtailed because of these lower oil prices,” Rubin said. “I would expect to see reduced U.S. production in a couple years from now, but the current production is sort of locked in for the next couple years.”
So, decent prices, decent supply. Hopefully.
All three offered disclaimers about world events: War. Hurricanes. General surprising developments.
“One thing with petroleum prices, it’s just too volatile,” Rubin said. “Nobody saw this coming; a year ago, no one saw these low prices.”
The long range of it
Some Maine oil dealers are still offering seasonal lock-in rates, according to their websites. Py heard about a fair amount of locking in this summer when everyone wondered how much lower prices could possibly go.
Dealers, too, he said, have been happy about the price slide. The industry employs about 8,000 people in Maine in heating oil, propane and service.
“When you buy 10,000 gallons at a time, the difference between $2 and $3 is a lot, so you don’t have that kind of carrying costs,” Py said. “Those savings can get translated into more savings for the customer, some better operating revenues for the company. It all works better at a lower price.”
Rector and others fervently hope the unexpected savings inspires weatherization and heat-saving projects at home. There’s a risk of complacency in the economic relief.
“If you’ve been able to increase the diversity of heating sources, then we’re going to be in better shape as a state than if we’re all heavily reliant on heating oil,” she said.
Someday, maybe not too far away, prices will shoot back up, sure as that unicorn will head back into hiding.
kskelton@sunjournal.com
LIHEAP outlook stable in Maine
Federal funding for the state’s low-income heating assistance program is the same as last year, but with the drop in oil prices, that money should go further this winter, according to MaineHousing spokeswoman Deborah Turcotte.
Maine’s Community Action Programs (Community Concepts in Androscoggin and Oxford counties, Western Maine Community Action in Franklin County) began taking appointments for LIHEAP in mid-August.
Applicants must bring proof of income and address, the Social Security numbers of everyone living in the house and utility bills.
Funds will be disbursed in late November.
Turcotte said the program wasn’t designed to cover all costs of heating over the winter, just to be a help.
Last year, 45,488 Maine households with 95,840 people received $25.5 million through LIHEAP. The average benefit was $636.
“There are people who are sitting in their houses, under blankets, with extra pairs of socks on, wearing layers of clothes just to keep warm,” Turcotte said. “They’re shutting off good portions of their houses just to stay in one room to keep that part heated. It’s not easy. Knowing that they’ll be able to buy a little more oil this year and stay warm a little bit longer, that’s always a good thing.”
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