State of Nebraska
Heating Oil and Propane Program
2006/2007 Winter Heating Season

Midseason Report
January 2007

The Nebraska 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 in the nation during most of the heating season.

Heating Oil

Trend--
Nebraska's residential heating oil prices began this heating season 48 cents lower than the previous season yet 51 cents higher than two years ago.  Prices remain high due to increased crude oil and diesel fuel prices and lower distillate supply levels.  Over the five Mondays in October, heating oil prices were stable at $2.11 to $2.14 per gallon.  Prices increased slightly in November and December and then fell to $2 due to reduced demand resulting from mild weather conditions.  The average price at the beginning of 2007 was 17 cents higher than 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 2006 was $2.13.  The average price in October during previous heating seasons is set out below:

2005 - $2.66
2004 - $1.70
2003 - $1.15
2002 - $1.08
2001 - $1.01

Midseason Average--
Last year’s midseason average price was revised from $2.31 to $2.34.  Nebraska’s 2006/2007 midseason average was $2.17.  The midseason average was $2.31 for the Midwest Region and $2.40 for the nation.  From week to week, other states in the Midwest Region have had higher prices than Nebraska.  States near Nebraska, such as Iowa and Minnesota, had midseason averages of $2.29 and $2.33, respectively.

Retail Versus Wholesale--
During the first half of last year’s heating season, Nebraska’s retail price ranged from $2.01 to $2.80, while the wholesale price ranged from $1.71 to $2.59.  During the first half of this heating season, Nebraska’s retail price ranged from $2.11 to $2.23, while the wholesale price ranged from $1.85 to $2.09.

Last season, Nebraska’s rack-to-retail margin fluctuated between 10 to 46 cents per gallon during the months of October, November, and December.  The margin fluctuated between 11 to 28 cents per gallon during the same months this season.

Propane

Trend--
Nebraska's residential propane prices began this heating season six cents lower than the previous season but yet 26 cents higher than two years ago.  Prices remain high due to continuing high natural gas prices and crude oil prices.  Propane prices were stable throughout the first half of the heating season with a slight increase of five cents by the end of December.  The average price at the beginning of 2007 was $1.46, which was six cents lower than a year ago.  For the second consecutive year, two states in the Midwest Region, Ohio and Kentucky, experienced prices over $2 per gallon.

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 2006 was $1.41.  The average price in October during previous heating seasons is set out below:

2005 - $1.48
2004 - $1.22
2003 - $0.96
2002 - $0.73
2001 - $0.79

Midseason Average--
Last year's midseason average price was $1.48.  Nebraska’s 2006/2007 midseason average was $1.43.  The midseason average was $1.75 for the Midwest Region and $1.96 for the nation.  From week to week, other states in the Midwest Region have had higher prices than Nebraska.  States adjacent to Nebraska, such as Iowa, South Dakota, and Missouri, had midseason averages of $1.49, $1.48, and $1.64, respectively.

Retail Versus Wholesale--
During the first half of last year’s heating season, Nebraska’s retail price ranged from $1.44 to $1.53, while the wholesale price ranged from $1.02 to $1.22.  During the first half of this heating season, Nebraska’s retail price ranged from $1.40 to $1.47, while the wholesale price ranged from $0.95 to $1.06.

Last season, Nebraska’s rack-to-retail margin fluctuated between 26 to 45 cents per gallon during the months of October, November, and December.  The margin fluctuated between 38 to 49 cents per gallon during the same months this season.

Weather

Weather continues to be a key wild card each winter.  Due to El Nino conditions, the National Oceanic Atmospheric Administration expected a warmer-than-normal winter in 2006/2007 although the weather would still be colder than the previous winter.

Nebraska had 482 heating degree days during October 2006.  The state normally has 412 heating degree days during the month of October which indicates that the weather in October 2006 was 17 percent colder 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 February, 2007.

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