State of Nebraska
Heating Oil and Propane Program
2010/2011 Winter Heating Season

 

Midseason Report
January 2011



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 higher than the previous season due to increasing crude oil prices and low heating oil inventories.  Inventories started the heating season at a level that was below normal in Nebraska.  At the beginning of October, inventories were at 6 thousand barrels, which was an abnormally low level compared to previous years.  Prices were on a steady upward trend through October, November, and December and had gained 24 cents per gallon by the end of December.  The average price at the beginning of 2011 was $2.87.  Prices followed the 2007/2008 prices, but had not reached the 2007/2008 level by the end of December.

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 2010 was $2.65.  The average price in October during previous heating seasons is set out below:

2009 - $2.25
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 2010/2011 midseason average was $2.74.  The midseason average was $2.87 for the Midwest Region and $3.10 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 $2.77 and $2.90, respectively.

Retail Versus Wholesale--
During the first half of last year’s 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.  During the first half of this heating season, Nebraska’s average retail price ranged from $2.63 to $2.86, while the average wholesale price ranged from $2.37 to $2.63.

Last season, Nebraska’s rack-to-retail margin fluctuated between 16 to 39 cents per gallon during the months of October, November, and December.  The margin fluctuated between 17 to 32 cents per gallon during the same months this season.


Propane

Trend--
Nebraska's residential propane prices began this heating season 29 cents per gallon higher than the previous season.  Prices were higher due to increasing crude oil prices; there wasn't a shortfall in inventory to blame.  Inventories started the heating season at a level that was above normal in Nebraska.  At the beginning of October, inventories were at 369 thousand barrels, which was a higher level compared to previous years.  Throughout October, November, and December, propane prices steadily increased 14 cents and reached $1.72 by the end of December.  The average price at the beginning of 2011 was $1.73, which was relatively the same as 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 2010 was $1.61.  The average price in October during previous heating seasons is set out below:

2009 - $1.36
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 $1.49.  Nebraska’s 2010/2011 midseason average was $1.65.  The midseason average was $1.95 for the Midwest Region and $2.52 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 $1.68, $1.72, and $1.88, respectively.

Retail Versus Wholesale--
During the first half of last year’s heating season, Nebraska’s retail price ranged from $1.29 to $1.70, while the wholesale price ranged from 95 cents to $1.42.  During the first half of this heating season, Nebraska’s average retail price ranged from $1.58 to $1.72, while the average wholesale price ranged from $1.22 to $1.35.

Last season, Nebraska’s rack-to-retail margin fluctuated between 28 to 38 cents per gallon during the months of October, November, and December.  The margin fluctuated between 30 to 43 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 colder-than-normal weather during the 2010/2011 winter season.  Heating degree days in Nebraska indicated that the weather was 22 percent warmer than normal during October 2010, 5 percent warmer than normal during November 2010, and 2 percent colder than normal during December 2010.


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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