State of Nebraska
Heating Oil and Propane Program
2007/2008 Winter Heating Season

 

Midseason Report
January 2008



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 57 cents higher than the previous season and ten cents higher than two years ago.  Prices continue to remain high due to higher crude oil prices.  Over the first three Mondays in October, heating oil prices were stable at $2.70 to $2.72 per gallon.  Prices started increasing at the end of Ocober and didn't stablize until the end of November when prices reached a peak at $3.08.  Throughout December, prices slowly fell a total of ten cents.  The average price at the beginning of 2008 was 84 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 2007 was $2.75.  The average price in October during previous heating seasons is set out below:

2006 - $2.13
2005 - $2.66
2004 - $1.70
2003 - $1.15
2002 - $1.08
2001 - $1.01

Midseason Average--
Nebraska’s 2007/2008 midseason average was $2.92.  The midseason average was $3.04 for the Midwest Region and $3.13 for the nation.  From week to week, other states in the Midwest Region have had comparable or higher prices than Nebraska.  States near Nebraska, such as Iowa and Minnesota, had midseason averages of $2.97 and $3.11, respectively.

Retail Versus Wholesale--
During the first half of last year’s heating season, Nebraska’s average retail price ranged from $2.11 to $2.23, while the average wholesale price ranged from $1.85 to $2.09.  During the first half of this heating season, Nebraska’s average retail price ranged from $2.69 to $3.08, while the average wholesale price ranged from $2.47 to $2.90.

Last season, Nebraska’s rack-to-retail margin fluctuated between 11 to 28 cents per gallon during the months of October, November, and December.  The margin fluctuated between 16 to 42 cents per gallon during the same months this season.


Propane

Trend--
Nebraska's residential propane prices began this heating season 24 cents higher than the previous season and 18 cents higher than two years ago.  Prices continue to remain high due to lower inventories, high natural gas and crude oil prices, and strong petrochemical sector demand.  Inventories started the heating season at a lower level due to reduced Canadian imports during the build season (April through September).  Throughout the first half of the heating season, propane prices gradually increased 25 cents reaching $1.91 by the end of December.  The average price at the beginning of 2008 was $1.91, which was 49 cents higher than a year ago.  During the last two years, two states in the Midwest Region, Ohio and Kentucky, experienced average prices over $2 per gallon.  This year, only three states did not surpass the $2 mark—North Dakota, South Dakota, and Nebraska.

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 2007 was $1.71.  The average price in October during previous heating seasons is set out below:

2006 - $1.41
2005 - $1.48
2004 - $1.22
2003 - $0.96
2002 - $0.73
2001 - $0.79

Midseason Average--
Last year's midseason average price was $1.43.  Nebraska’s 2007/2008 midseason average was $1.83.  The midseason average was $2.13 for the Midwest Region and $2.37 for the nation.  From week to week, other states in the Midwest Region have had comparable or higher prices than Nebraska.  States adjacent to Nebraska, such as Iowa, South Dakota, and Missouri, had midseason averages of $1.87, $1.85, and $2.04, respectively.

Retail Versus Wholesale--
During the first half of last year’s heating season, Nebraska’s retail price ranged from $1.40 to $1.47, while the wholesale price ranged from $0.95 to $1.06.  During the first half of this heating season, Nebraska’s average retail price ranged from $1.66 to $1.91, while the average wholesale price ranged from $1.39 to $1.63.

Last season, Nebraska’s rack-to-retail margin fluctuated between 38 to 49 cents per gallon during the months of October, November, and December.  The margin fluctuated between 23 to 37 cents per gallon during the same months this season.


Weather

Weather is the key wild card each winter.  While weak La Nina conditions were observed in the Pacific, the National Oceanic Atmospheric Administration maintained a forecast that included warmer-than-normal winter weather in 2007/2008.

Nebraska had 310 heating degree days during October 2007.  The state normally has 412 heating degree days during the month of October which indicates that the weather in October 2007 was 25 percent warmer than normal.  Estimates for November and December heating degree days were 764 and 1343, respectively.  The state normally has 851 and 1220 heating degree days in November and December, respectively.  This indicates that the weather in November was 10 percent warmer than normal and the weather in December was 10 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, 2008.

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