A Period of Stable Prices...
A Look Back at Propane and Heating Oil Prices
Nebraska's heating oil and propane prices were stable during the 2003/2004 heating season. Factors that impact prices each season include: national and state inventory and import levels; refinery downtime; prices of crude oil and natural gas; the weather; the economy; and the political arena. All of these factors lead to increased demand or lower-than-normal supplies during the winter heating season. Factors impacting 2003/2004 heating season prices were:
Weather is Wildcard
- National inventory level of heating oil near historical low at the end of the 2002/2003
heating season and the continuance of low levels at the beginning of the 2003/2004
heating season thereby lacking the normal cushion;
- National inventory level of propane at the lowest level in over 30 years at the end of the
2002/2003 heating season and the start of the 2003/2004 heating season below the level of
60 million barrels (the level considered to be adequate for winter);
- Regional propane storage goal not attained during the traditional build season (April
- Strong flow of propane imports;
- High crude oil prices;
- High natural gas prices;
- Oil refinery shutdowns due to planned maintenance and unexpected hazards;
- Power blackout on August 14, 2003;
- War with Iraq;
- Improving economy; and
- Relatively normal winter temperatures.
Of the factors that impact prices, weather remains the key wildcard each winter. The state had relatively normal winter temperatures since degree days indicated the weather to be warmer than normal by only 5 percent. The state had 5393 heating degree days from October to March compared to 5667 normal heating degree days during that period.
A Yearly Snapshot
Under a grant from the U.S. Department of Energy, the Energy Office monitors propane and heating oil prices during the season, reporting weekly prices to the federal agency. Supply conditions are also assessed during the weekly calls to dealers in the state.
Heating oil prices began the most recent heating season 3 to 4 cents higher than the previous two years. Prices at the end of the 2003/2004 heating season were below prices from a year ago while still considerably higher from prices of two years ago.
The price spread from the 2001/2002 to the 2002/2003 heating season increased only slightly while the 2003/2004 heating season's spread decreased significantly in comparison to both prior seasons. This indicates stability--there were no big increases or decreases in price from week to week. The graph below shows the lowest average price and highest average price per gallon of heating oil from the last three heating seasons and the difference, or spread, between the two prices.
The 2003/2004 heating season began with a price 20 cents higher than last year and 11 cents higher than two years ago. The price trend during the 2001/2002 heating season was relatively flat or stable, taking into account a mild winter, while the 2002/2003 heating season had higher prices in January and February with a late price spike in March due to low supplies. During the 2003/2004 heating season, prices were stable although significantly higher due to the tight supply situation.
The graph below shows the highest average price and the lowest average price per gallon of propane from the last three heating seasons and the difference, or spread, between the high and low prices. The price spread from the 2001/2002 to the 2002/2003 heating season shows a major increase indicating volatility. The increase is seen in the high price for 2002/2003 while the low price remained consistent to the previous season. The 2003/2004 heating season spread shows a decrease back to the 2001/2002 level, again, indicating stable prices.
The complete report, State of Nebraska Heating Oil and Propane Program, 2003/2004 Winter Heating Season,
is located on the Energy office’s web site.