Never mind the thermostat. Have you checked your home heating bill?
U.S. heating oil prices were 65 percent higher this October than in October of last year according to the U.S. Energy Information Agency (EIA). The winter heating season runs from October 1 through the end of March.
According to the New York State Energy Research and Development Authority’s home heating oil price monitoring program, the average state-wide price for home heating oil during October was $5.65 per gallon, better than the national average, which rose to a high of $5.90 per gallon. That’s up nearly $2 from $3.70 for the same period last season. Nationally, prices fell to $5.79 per gallon in mid-November.
No. 2 heating oil is the primary home heating fuel in 4.1 percent of U.S. homes, mostly in New England and New York. It is anticipated that households using No. 2 oil as their primary heat source will spend 45 percent more on average this winter compared with last year because of higher retail prices and consumption.
“Inventory is below the five- and one-year averages. Supply is not keeping up with demand,” said Rocco Lacertosa, the CEO of the Hauppauge-based New York Oil Heating Association, a nonprofit advocacy group. “A really cold winter will further pressure existing inventory, which is already not great.”
Those heating with natural gas can expect to pay at least $20 more next month compared to January 2022. However, if there is an economic slowdown, i.e., recession, next year overall demand will drop as supply will increase. The EIA expects a 3.4 percent decrease in natural gas consumption in the industrial sector in 2023.
Locally, the 2022-2023 winter is likely to open with a somewhat cool, wintry pattern during December and January. The second half may be more volatile and with a warmer-than-normal February according to the National Oceanic and Atmospheric Administration. The National Weather Service also predicts warmer-than-average temperatures along the Atlantic coast this season as La Niña returns for the third consecutive winter, driving warmer-than-average temperatures toward the Eastern Seaboard.
What’s behind the price increases? While weather is a large piece of the puzzle, there are numerous other factors that combine to form something of an interconnected global comedy of errors. Worldwide energy markets have suffered a pandemic, an uneven recovery, an erratic OPEC policy and a chaotic energy supply chain due to the Russian-Ukraine conflict. Even before 2022 global inventories were strained due to a stronger recovery in demand than supply from COVID. China’s COVID-related restrictions, which led to underperforming energy demand growth and weaker Chinese energy imports, kept global consumption relatively low. Otherwise, prices of all commodities likely would have increased.
Barring a severe recession, it will take several years of stronger supply than demand growth for inventory cushions to return to comfortable levels, particularly if Russian energy export reductions are more severe than anticipated, according to a Standard & Poor’s Global Commodity Insights report.
Locally, while East Coast refineries are running at close to full capacity, regional refining capacity has fallen in recent years. In 2019, the Philadelphia Energy Solutions refinery, the East Coast region’s largest refinery, was permanently closed due to a fire. New refineries are unlikely to be built in the United States due to environmental concerns.
While no one can predict the future of energy prices, homeowners are making a difference. Equipment upgrades, moving to alternative energy, and conservation each help to reduce consumption. “New boilers are substantially more efficient than their predecessors,” says Kent Fuhrman, the president of Swezey Fuel. “New models retain the heat in the boiler and have less chimney-heat loss with lower water volume.” Fuhrman noted that many Eastern Long Island households have upgraded to more efficient, newer heating systems. “The homeowner is making a dent,” he said.
Many fuel delivery companies like WS Fuel Corp. of Hampton Bays offer discounts to seniors and veterans. Similarly, New York State does not impose a tax on No. 2 fuel oil used to heat homes. To claim an exemption from sales or use taxes for energy sources or services for a mixed-use property with a single meter or a single storage tank, the property owner must determine the percentage of the property used for residential purposes.
Consumers can also substantially save by buying oil in bulk, i.e., about 150 gallons and when prices typically are lower such as during the spring and summer months. Heating system upgrades can reduce annual home heating expenses by 30 to 40 percent and pay for themselves in a few years according to the New York State Energy Coalition, which is offering homeowners up to $800 in rebates for specified upgrades. Visit nysecnow.org/rebate-program.
