State of Nebraska
Heating Oil and Propane Program
2008/2009 Winter Heating Season

 

Midseason Report
January 2009



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 80 cents higher than the previous season.  Prices continued to remain high due to historically high crude oil prices, but as crude oil prices fell, heating oil prices also fell.  Heating oil prices fell each week resulting in a drop of $1.62 during the first half of the heating season.  The average price at the beginning of 2009 was $1.14 lower 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 2008 was $3.14.  The average price in October during previous heating seasons is set out below:

2007 - $2.75
2006 - $2.13
2005 - $2.66
2004 - $1.70
2003 - $1.15
2002 - $1.08
2001 - $1.01

Midseason Average--
Nebraska’s 2008/2009 midseason average was $2.49.  The midseason average was $2.59 for the Midwest Region and $2.86 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 $2.53 and $2.73, respectively.

Retail Versus Wholesale--
During the first half of last year’s 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.  During the first half of this heating season, Nebraska’s average retail price ranged from $1.88 to $3.50, while the average wholesale price ranged from $1.57 to $3.27.

Last season, Nebraska’s rack-to-retail margin fluctuated between 16 to 42 cents per gallon during the months of October, November, and December.  The margin fluctuated between 7 to 49 cents per gallon during the same months this season.


Propane

Trend--
Nebraska's residential propane prices began this heating season 37 cents higher than the previous season.  Prices were high due to high crude oil prices.  Inventories started the heating season at an adequate level in Nebraska.  Throughout the October and November, propane prices gradually decreased 45 cents reaching $1.58 by the beginning of December and remaining at that average to the end of December.  The average price at the beginning of 2009 was $1.56, which was 40 cents lower than 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 2008 was $1.85.  The average price in October during previous heating seasons is set out below:

2007 - $1.71
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 $1.83.  Nebraska’s 2008/2009 midseason average was $1.67.  The midseason average was $2.20 for the Midwest Region and $2.46 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 $1.90, $1.77, and $2.11, respectively.

Retail Versus Wholesale--
During the first half of last year’s heating season, Nebraska’s retail price ranged from $1.66 to $1.91, while the wholesale price ranged from $1.39 to $1.63.  During the first half of this heating season, Nebraska’s average retail price ranged from $1.55 to $2.03, while the average wholesale price ranged from 69 cents to $1.41.

Last season, Nebraska’s rack-to-retail margin fluctuated between 23 to 37 cents per gallon during the months of October, November, and December.  The margin fluctuated between 61 to 85 cents per gallon during the same months this season.


Weather

Weather is the key wild card each winter.  The National Oceanic Atmospheric Administration maintained a forecast that included warmer-than-normal winter weather in 2008/2009.

Nebraska had 411 heating degree days during October 2008.  The state normally has 412 heating degree days during the month of October which indicates that the weather in October 2008 was normal.  Estimates for November and December heating degree days were 773 and 1362, respectively.  The state normally has 851 and 1220 heating degree days in November and December, respectively.  This indicates that the weather in November was nine percent warmer than normal and the weather in December was 12 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 March, 2009.

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