717594_866882-HeatingOilPricesME09

Mainers are likely to spend hundreds of millions of dollars less to keep their homes warm this winter compared with recent years, thanks to plummeting oil prices
and declining or stable prices for other fuels.

The statewide average price for home heating oil in Maine has fallen below $2 a gallon, the lowest it has been since 2004, according to a survey released Wednesday by the Governor’s Energy Office. Some dealers are offering cash prices below $1.70 a gallon, the survey found.

As the heating season begins, prices for other fuels such as natural gas, propane and wood products also appear to be stable or declining.

“Any delivered fuel is going to be lower than many people remember,” said Lisa Smith, senior planner at the energy office.

The contrast was especially sharp when Smith compared today’s trends with 2013-14, the last of three consecutive winters when average heating oil prices were above $3.50 a gallon. Those average prices peaked that year at $3.71 a gallon. Based on typical usage levels, Smith calculated that Mainers who heat with oil and kerosene spent nearly $705 million that winter.

Last winter, as wholesale petroleum prices began slipping, the peak price fell to $2.85 a gallon. That cut the total statewide expense by $164 million.

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The latest state survey, taken Monday, shows average heating oil prices at $1.99 a gallon, down 9 cents since late August. If average prices stay in the $2 range this winter, savings for those who burn oil could total $325 million compared with two years ago.

In Winthrop, those lower prices coupled with efficiency upgrades made at the middle school, will save the school system more than $100,000, said Superintendent Gary Rosenthal.

The district paid $3.01 per gallon for fuel during the 2013-14 school year. That price fell a few cents to $2.99 during the 2014-15 school year. Both prices were locked in for 90,000 gallons delivered to the district’s three schools: the grade school, the middle school and the high school.

This year the district will pay $1.99, a price negotiated with Richard Guerette at Winthrop Fuel Co.

“He lives in the community and he’s been very good working with us, trying to get the best price,” Rosenthal said. “We’re pretty pleased with that.”

But lower prices are just part of the story. The energy upgrades at the middle school resulted in significantly less consumption last year, Rosenthal said. He expects the schools to use about 70,000 gallons this year.

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“Not only will we come down a full dollar a gallon, we’re also going to save 20,000 gallons this year,” he said.

The net effect will be about a $110,000 reduction in fuel costs. That’s money that will be used to revamp the gifted and talented program with enhanced science, math, technology and arts programs. The district also will add Spanish and French at the grade school and middle school.

“We really want the middle school to come back to offering the services that it did,” Rosenthal said. “I think we’re well on our way.”

Years of volatile oil prices have led many Mainers to switch to heat pumps, wood fuels and natural gas. But roughly seven in 10 homes continue to burn oil, according to federal figures, which is the highest concentration in the country.

NATURAL GAS, PROPANE PRICES FALL

Falling oil prices seem to have slowed the conversion to alternatives among customers of Estes Oil & Propane in York, said company president Mike Estes.

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“People are enjoying prices $1 less a gallon than last year,” he said. “That’s good. I don’t see the stress with our customers that we’ve seen the past five or six years. They are at a comfort level with these prices.”

Estes also said that roughly 40 percent of his customers enroll in a monthly payment or price-cap plan, the latter of which sets a ceiling in exchange for a 25-cents-per-gallon premium. Cap plans protect against big jumps, and allow customers to benefit when prices dip.

The market factors that sent oil soaring two years ago also influenced propane, which suffered from a supply shortage, among other things. Average prices in Maine shot to $3.50 a gallon in 2014, discouraging many people from converting to the fuel. This week, propane had fallen to $2.14 a gallon in the state survey, down 7 cents since late August. Also this week, the U.S. Energy Information Administration reported that national propane inventories stood at a 22-year high.

Oil’s wild ride in recent years has prompted many homes and businesses to convert to natural gas, which is expanding in southern and central Maine. Each of the four gas companies in Maine has different price structures, but for the 30,000 customers of Unitil, rates this winter are likely to be the lowest in three years.

The company is awaiting approval next month from the Public Utilities Commission, but the proposed supply rate is expected to be around 64 cents per hundred cubic feet, down from $1.17 last winter. For a typical home, that would add up to a $793 bill, down 29 percent from last year.

“The lower rate reflects the lower overall market cost of gas this winter, compared to the previous winter,” said Alec O’Meara, a Unitil spokesman.

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Low oil prices have tempered conversion from oil heat, but O’Meara said Unitil, which mostly serves southern Maine and is the state’s largest gas utility, continues to grow at a rate of 3 percent annually.

VARIOUS WOOD FUELS STILL POPULAR

Prices for wood fuel in its many forms seem stable and demand continues to be strong.

Bob Maurais, president of Southern Maine Renewable Fuels in Windham, said prices of wood pellets and bricks haven’t changed by more than $5 to $10 a ton over the past couple of years. He’s selling Maine Choice wood pellets for $281 a ton and Canawick compressed hardwood bricks for $316 a ton.

Maurais said the slide in oil prices last winter led him to check with his customers, to see if they planned to buy the same amount of fuel this year. Most said they would. He suspects, however, that those with oil heat may take advantage of the low prices to turn up the thermostat in the early fall and late spring, before they begin burning wood in earnest.

People who have invested in pellet stoves will keep using them, he said, in part because the penetrating, radiant warmth given off by wood heaters is hard to beat in the dead of winter.

“It’s a heat you don’t get from baseboards,” he said.

 


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