Gasoline prices have been tumbling, but don’t expect heating oil prices to follow suit as the state enters prime winter heating season.

The average price for a gallon of gasoline in Maine was $2.42 a gallon this week, down 4.5 cents a gallon from a week ago and a penny above the national average, according to gasbuddy.com, which tracks gasoline prices around the country. Prices in Maine were nearly 6 cents a gallon lower than a year ago, and 24.4 cents a gallon lower than a month ago.

Home heating oil, historically, costs less than gasoline. But that relationship has been upended this year and it may not revert back any time soon. That’s because Maine oil dealers locked in supplies when prices were high, and because national demand for heating oil and its first cousin, diesel fuel, continues to be strong.

“It defies common sense,” said John Riley, a Falmouth resident who watches commodities markets when he needs an oil delivery. He said crude oil prices and wholesale heating oil prices have come down, but the market for heating oil in Maine has barely budged.

“There’s a lack of competitiveness,” said Riley, who paid $2.79 a gallon for heating oil when he bought 100 gallons two weeks ago.

Experts say that Riley should expect to hunt hard for good deals in the future.

“Don’t look for any bargains when it comes to heating or diesel oil in the years to come,” said Patrick DeHaan, head of petroleum analysis for gasbuddy.com.

While gas prices have fallen from a statewide average high of $2.95 a gallon in May – and the steepest price declines have been in the last couple of months, falling about 40 cents a gallon since mid-October – heating oil prices have gone in the opposite direction.

From a low of about $2.45 a gallon for much of the summer, heating oil prices in Greater Portland averaged $2.83 a gallon this week, according to maineoil.com, which compiles heating oil prices from around the state.

Prices ranged from $2.78 a gallon in the Bangor region to a high of $2.89 a gallon in Augusta-Waterville, according to the website. The Governor’s Energy Office said that the statewide average this week was $2.96 a gallon, down a penny from a week ago. The average has stayed within a few cents of $3 a gallon since October.

DIFFERENT DEMANDS

The difference in the price trajectories can be explained by inventories and demand.

Gasoline is still tied tightly to crude oil prices and supplies. Overseas oil-producing countries tried to cut output to push prices higher, but have been largely unsuccessful. That effort was countered by the U.S., where production has stabilized supplies and pushed prices lower.

The gasoline market is also entering a slow period, as people tend to drive less in the winter, helping to keep a lid on prices.

But just the opposite is occurring in the home heating and diesel markets. Those fuels, called distillates, are refined in a similar manner and are seeing increasing demand.

The Energy Information Administration said the result is that gasoline stocks are adequate, demand is flat and prices are sliding, but the inventory is tight for diesel fuel and home heating oil. That’s propping up prices for those products.

And an early winter cold snap, particularly in the eastern U.S., is adding to the demand for home heating oil.

“U.S. distillate inventories remain 10 percent lower than the five-year average, and the increasingly tight market was met by colder-than-normal weather,” the EIA said this week. “Temperatures in November were the coldest for the month in four years, and (estimates for) U.S. distillate consumption was the highest for the month of November on record.”

PRICES SET MONTHS AGO

Maine oil dealers locked in their wholesale prices months ago, many when oil prices were higher, said Jamie Py, the president and chief executive officer of the Maine Energy Marketers Association.

Factoring in the cold start to the winter and higher costs for employees because of a tight labor market means dealers have little room to move on price, he said.

Gasbuddy’s DeHaan said high distillate prices aren’t likely to change soon. Diesel use, in particular, is tied to a strong economy. For instance, during the holidays, people order gifts online which are then delivered by truck. Online retail giant Amazon reported its biggest-ever Thanksgiving holiday sales this year, with 180 million items scheduled for delivery. More buying means more trucks on the road, said DeHaan.

WINTER TENDS TO KEEP PRICES HIGH

Also, a new rule that will come into effect in a little more than a year will require container shippers – the ocean-going kind – to either install exhaust scrubbers on their vessels or switch to ultra-low sulfur diesel fuel. That will further squeeze inventories, DeHaan said, and pressure on diesel prices will stay high.

Lisa Smith, senior planner in the governor’s energy office, said she’s fielding complaints about prices in which consumers suspect there’s a conspiracy to keep them paying higher prices for heating oil.

“There’s not a direct line from the crude price to the heating oil price,” she said.

Smith also said that it’s almost unprecedented to see heating oil prices drop in the winter. The only exception she could recall was three years ago, when the price of crude oil tumbled to about $30 a barrel, less than half of today’s prices.

And consumers should be aware that oil prices are similar throughout the Northeast, she said.

“This is a region-wide thing,” Smith said. “This is happening all through New England and New York state.”

Edward D. Murphy can be contacted at 791-6465 or at:

[email protected]

Augusta and Waterville news

Get news and events from your towns in your inbox every Friday.


  • This field is for validation purposes and should be left unchanged.