By Stephen Singer, Staff Writer, Portland Press Herald
Oil prices are down from previous highs and propane inventories are strong, boding well for Mainers as winter approaches, energy experts said at a recent gathering in Portland.
“We’re in a good position as we’re heading into this coming winter,” Charlie Agnew, director of energy services at Competitive Energy Services, said at the Oct. 24 seminar organized by the consulting group.
The only caveat, he said, is to keep an eye on the weather. That could be favorable, too – a mild winter could keep demand down.
The National Weather Service Climate Prediction Center said on Oct. 19 that Maine has a 50% to 60% chance of above-normal temperatures in January, February and March. And coastal Maine has a 33% to 40% chance of “leaning above” normal precipitation.
However, a meteorologist for News Center Maine expects El Nino to return this winter, which could mean more snow and more nor’easters. But it is too early to tell.
“The one area to keep an eye on is the southern coast, which could get robbed from big snows during nor’easters thanks to an onshore wind component from a ‘warmer’ Gulf of Maine,” Jason Nappi said in a recent forecast.
Oil sold at $113.77 a barrel in June 2022, according to the U.S. Energy Information Administration. It’s been trading at slightly above $70 this year. Zack Hallock, senior energy services adviser at CES, said higher interest rates set by the Federal Reserve to cool the economy and reduce inflation have “been putting a pretty heavy hand” on oil pricing, he said.
“Markets have been trading sideways in the last four weeks,” Hallock said.
Three-fifths of Maine’s households use fuel oil as their primary energy source for home heating, a larger share than any other state, according to the EIA.
Hallock doesn’t expect to see the price of oil trading much beyond $80 to $90 a barrel. Storage, he said, is low, providing a signal to produce oil and get it into storage. “That’s sort of helping keep prices relatively stable,” Hallock said.
Some price volatility is possible early next year, but the war between Israel and Hamas has “not completely rewritten the outlook for calendar year ‘24,” he said.
The governor's office said the retail price of heating oil was $4.06 a gallon on Oct. 23, up from $3.67 in January 2012, but down from a high of $5.92 a gallon in May 2022.
In contrast to the widespread use of oil, natural gas use on a per capita basis in Maine was third-lowest in the nation in 2020, after Hawaii and Vermont, in large part because most of Maine lacks natural gas distribution systems, the EIA said.
The price of natural gas is still important because it’s the energy of choice for power generators in New England.
Natural gas futures – the price at which it’s traded at a price at a future date – are on the rise, CES said. It’s trading at $3.51 per million British thermal units for 2024, $4.04 in 2025 and $4.06 in 2026, CES said. “Now is a good time to look at pricing for renewal terms,” CES said.
The price of propane has not been rising, said Chris Brook, director of natural gas and energy services at CES. Now is a “good time to purchase” propane, he said. “We really haven’t seen us breaking below this 70-cent-wholesale-per-gallon mark,” he said.
Brook credited strong inventories of propane in the Northeast, higher imports from Canada and a decline in exports to Mexico.
The EIA this month projected that the average U.S. household heating with natural gas will pay 21% less this winter, while average costs for homes using electricity are projected to be in line with last year’s costs, and propane could be 3% lower nationwide. But families are expected to pay 8% more to heat their homes with oil, the agency said.
Those forecasts take into account National Oceanic and Atmospheric Administration weather projections, current energy reserves and other factors.
But world events, including the prospect of war expanding in the Middle East, could change those projections. That’s especially true for heating oil, which is sold based on market prices and not regulated like natural gas and electricity.
This report contains material from The Associated Press.