State of Nebraska
Heating Oil and Propane Program
2009/2010 Winter Heating Season

 

Midseason Report
January 2010



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 $1.35 lower than the previous season due to lower crude oil prices.  Prices were relatively stable through October, November, and December and gained only 22 cents per gallon by the end of December.  The average price at the beginning of 2010 was $2.42.

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 2009 was $2.25.  The average price in October during previous heating seasons is set out below:

2008 - $3.14
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 2009/2010 midseason average was $2.34.  The midseason average was $2.46 for the Midwest Region and $2.71 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 $2.37 and $2.46, respectively.

Retail Versus Wholesale--
During the first half of last year’s 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.  During the first half of this heating season, Nebraska’s average retail price ranged from $2.15 to $2.40, while the average wholesale price ranged from $1.89 to $2.17.

Last season, Nebraska’s rack-to-retail margin fluctuated between 7 to 49 cents per gallon during the months of October, November, and December.  The margin fluctuated between 16 to 39 cents per gallon during the same months this season.


Propane

Trend--
Nebraska's residential propane prices began this heating season 74 cents lower than the previous season.  Prices were lower due to the drop in crude oil prices.  Inventories started the heating season at an adequate level in Nebraska.  At the beginning of October, inventories were at 347 thousand barrels, which was comparable to previous years.  Throughout October, November, and December, propane prices steadily increased 41 cents reaching $1.70 by the end of December.  The average price at the beginning of 2010 was $1.74, which was 18 cents higher 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 2009 was $1.36.  The average price in October during previous heating seasons is set out below:

2008 - $1.85
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 $1.67.  Nebraska’s 2009/2010 midseason average was $1.49.  The midseason average was $1.73 for the Midwest Region and $2.24 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 $1.53, $1.60, and $1.68, respectively.

Retail Versus Wholesale--
During the first half of last year’s heating season, Nebraska’s retail price ranged from $1.55 to $2.03, while the wholesale price ranged from 69 cents to $1.41.  During the first half of this heating season, Nebraska’s average retail price ranged from $1.29 to $1.70, while the average wholesale price ranged from 95 cents to $1.42.

Last season, Nebraska’s rack-to-retail margin fluctuated between 61 to 85 cents per gallon during the months of October, November, and December.  The margin fluctuated between 28 to 38 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 2009/2010.

Nebraska had 647 heating degree days during October 2009.  The state normally has 412 heating degree days during that month which indicates that the weather was 57 percent cooler than normal for October.  Nebraska had 648 heating degree days during November 2009.  The state normally has 851 heating degree days during that month which indicates that the weather was 24 percent warmer than normal for November.  Nebraska had 1426 heating degree days during December 2009.  The state normally has 1220 heating degree days during that month which indicates that the weather was 17 percent cooler than normal for December.


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


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