State of Nebraska
Heating Oil and Propane Program
2005/2006 Winter Heating Season

 

Midseason Report
January 2006



The Energy Office participates in the State Heating Oil and Propane Program conducted by the U.S. Department of Energy.  Historically, Nebraska’s residential heating oil and propane prices have been the lowest in the Midwest Region and the nation during most of the heating season.

Heating Oil

Trend--
Residential heating oil prices began this heating season a dollar higher than the previous season due to increased crude oil and diesel fuel prices and lower distillate supply levels.  Over the first four Mondays in October, heating oil prices rose and finally peaked at $2.80 per gallon.  Prices then fell to $2 due to reduced demand resulting from mild weather conditions.  Prices started 2006 fifty cents above prices a year ago.

Average Price in October--
The average price in October is indicative of weather conditions and the winter supply outlook.  The average price in Nebraska in October 2005 was $2.66.  The average price in October during previous heating seasons has been:

2004/2005 - $1.70
2003/2004 - $1.15
2002/2003 - $1.08
2001/2002 - $1.01

Midseason Average--
Nebraska’s midseason average was $2.31.  Last year’s midseason average was $1.66.  The 2005/2006 midseason average was $2.50 for the Midwest Region and $2.52 for the nation.  From week to week, other states in the Midwest Region usually have had higher prices than Nebraska.  States near Nebraska, such as Iowa and Minnesota, had midseason averages of $2.38 and $2.52, respectively.

Retail Versus Wholesale--
During the first half of last year’s heating season, Nebraska’s retail price ranged from $1.53 to $1.79, while the wholesale price ranged from $1.18 to $1.62.  During the first half of this heating season, Nebraska’s retail price ranged from $2.01 to $2.80, while the wholesale price ranged from $1.71 to $2.59.

Last season, Nebraska’s rack-to-retail margin fluctuated between 11 to 40 cents per gallon during the months of October, November, and December.  The margin fluctuated between 10 to 46 cents per gallon during the same months this season.


Propane

Trend--
Residential propane prices began this heating season more than 30 cents higher than the previous season due to increased natural gas prices and crude oil prices.  Propane prices were stable through the first half of the heating season although, in the last two weeks of December, there was a seven-cent increase due to cold weather.  Prices started 2006 at $1.52, which was nearly 30 cents above prices a year ago.  Two states in the Midwest Region, Ohio and Kentucky, experienced prices over $2 per gallon during the first half of this season.

Average Price in October--
The average price in October is indicative of weather conditions and the winter supply outlook.  The average price in Nebraska in October 2005 was $1.48.  The average price in October during previous heating seasons has been:

2004/2005 - $1.22
2003/2004 - $0.96
2002/2003 - $0.73
2001/2002 - $0.79

Midseason Average--
Nebraska’s midseason average was $1.48.  Last year’s midseason average was $1.26.  The 2005/2006 midseason average was $1.78 for the Midwest Region and $1.95 for the nation.  From week to week, other states in the Midwest Region had higher prices than Nebraska.  States adjacent to Nebraska, such as Iowa, South Dakota, and Missouri, had midseason averages of $1.53, $1.53, and $1.67, respectively.

Retail Versus Wholesale--
During the first half of last year’s heating season, Nebraska’s retail price ranged from $1.16 to $1.31, while the wholesale price ranged from $0.84 to $1.07.  During the first half of this heating season, Nebraska’s retail price ranged from $1.44 to $1.53, while the wholesale price ranged from $1.02 to $1.22.

Last season, Nebraska’s rack-to-retail margin fluctuated between 24 to 41 cents per gallon during the months of October, November, and December.  The margin fluctuated between 26 to 45 cents per gallon during the same months this season.


Weather

Weather continues to be a key wild card each winter.  Nebraska had 356 heating degree days during October 2005.  The state normally has 412 heating degree days during the month of October which indicates that the weather in October 2005 was 14 percent warmer than normal.


Sources:  State Heating Oil and Propane Survey and the Weekly Petroleum Status Report.  Energy Information Administration, Washington, DC.  Nebraska Energy Office, Lincoln, NE.


This report was completed January, 2006.

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