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Forecast calls for less expensive winter heating season

Glenn Hulsberg from Swezey Fuel performs an annual

Glenn Hulsberg from Swezey Fuel performs an annual cleaning and adjustment service of an oil burner on a residential hot water boiler in Lake Grove on Oct. 22, 2015. Photo Credit: Ed Betz

Long Islanders who heat with oil, gas or electricity can expect to pay less to keep warm this winter than last, according to federal energy and weather officials and local energy providers.

A combination of the lowest prices in years for heating oil and natural gas, and predictions of a warmer than average winter, should leave more in the wallets of consumers, who are likely to use it to get caught up on bills or maybe splurge a little.

On Long Island, heating oil, the dominant heating fuel here, averaged $2.69 per gallon last week -- down $1.012, or more than 27 percent, from a year earlier, according to the New York State Energy Research and Development Authority. That's the lowest since the heating season of 2008-2009.

Analysts expect prices to remain low through the season. The U.S. Department of Energy forecasts that nationally the price per gallon of heating oil will average $2.57 this winter -- 47 cents, or 15 percent, lower than last winter. The national average price reported last week by the Energy Department was $2.442. Most heating oil is consumed in the Northeast.

"At the moment, everything looks stable at a level we haven't seen in many years," said Michael O'Connor, director of the 11,000-member residential fuel buyers cooperative run by the New York Public Interest Research Group, a nonprofit based in Albany and Manhattan.

The predicted savings for Long Islanders also hinge on a warmer winter than the colder-than-normal season last year. The National Oceanic and Atmospheric Administration's Climate Prediction Center is basing its forecast partly on an expectation for a strong El Niño effect -- an abnormal warming of surface ocean waters in the eastern tropical Pacific that generally leads to warmer temperatures across the northern United States.

"Above-average temperatures are favored across much of the West and the northern half of the contiguous United States," the center said in its winter forecast Oct. 15.

Add it all up, and the Energy Department forecasts the average national cost for using oil heat from October through March will be about $1,390, down $460, or 25 percent, from last winter.

Imperfect science

Of course, predicting the weather is an imperfect science. A similar forecast at this time last year for a warm winter turned out to be wrong, at least for Long Island; temperatures here in December, January and February combined were 3.1 degrees lower than normal. The average temperature in February was the second-coldest on record for the month in this region.

But private forecaster AccuWeather also has predicted a warm winter. "After the winter of 2014-2015 brought brutal cold to the northeastern United States, this season is set to be milder overall, but particularly during the early part of the season," it says on its website.

An average Long Island home uses about 800 gallons of oil a year, according to the Oil Heat Institute of Long Island, a trade group, including 600 gallons for heat and 200 gallons for hot water. The annual consumption represents a significant decline from more than 900 gallons a year just a few years ago, attributable to more efficient oil burners and conservation by consumers.

Kevin Rooney, chief executive of the Oil Heat Institute, said he doesn't foresee per-gallon heating oil prices on Long Island going much higher than they are now this winter. "The world is awash in oil," he said.

For this winter, NYPIRG offers members capped prices for fuel oil that vary locally but, generally, are about $2.89 a gallon, or $1 lower than last year, O'Connor said. As-delivered prices can be lower than the cap but can't be higher regardless of market conditions. A fixed price won't go lower, even if wholesale prices plummet.

Last winter's peak price on Long Island was $3.69 early in the season on Nov. 3.

It was only two years ago that the average price of heating oil on the Island hit a new winter record of $4.47 a gallon. That price spike resulted from bitter cold weather and refinery outages leading to a shortage of the fuel.

Since then, those who heat with oil and gas have reaped benefits from a decline of more than 50 percent in world crude oil prices, a result of increased U.S. production of crude, and a weakening in international energy demand due to economic slowdowns. In particular, that combination has slowed demand for diesel fuel, which is nearly identical to heating oil.

Plenty of inventory

The Energy Department said heating oil inventories, both globally and in the Northeast, are ample heading into winter. Further, it said, relatively strong gasoline refining margins this summer encouraged record-high global refinery runs, which produce heating oil and diesel as well as gasoline.

The Energy Department forecasts that gas heat customers will pay about 10 percent less this year for heat, including a predicted 6 percent drop in consumption from warmer weather and 4 percent from lower prices.

It says gas inventories will be at a seasonal record high by the end of October.

National Grid, the largest supplier of natural gas to Long Islanders, said its customers' bills for heat, hot water and cooking should be 7.6 percent less than last winter's from Nov. 1 to March 31, an average of $807. That includes the company's delivery charge. The projected decline reflects lower gas prices, and it assumes a normal winter, warmer than last.

"Based on current market forecasts, natural gas bills are expected to be at a ten-year low this winter because natural gas supply prices on the wholesale market continue to decline," the utility said in a statement.

Its forecast price per therm, a unit of energy, is $1.11 this winter, the equivalent of oil at $1.55 a gallon, the utility said. The figure was deemed mathematically correct by Rooney of the Oil Heat Institute.

The Energy Department said natural gas inventories nationally were 3.5 billion cubic feet on Sept. 25, 15 percent higher than a year ago and 4 percent higher than the previous five-year average.

Nationally, homeowners with electric heat will spend about $930 this winter, 3 percent less than last year, the Energy Department said, on prices 1 percent lower and consumption 2 percent lower from warmer temperatures.

Long Island electric rates per kilowatt hour were 40 percent higher last year than the national average, at 20.5 cents. PSEG Long Island, producer of most of the Island's electricity, estimated the average heating customer's bill for all electrical uses at $1,111.19 this winter, down 2.1 percent from last winter.

Relief for homeowners

Lower heating prices would provide relief for cash-strapped homeowners.

Debra Rubin, 51, who lives in Shirley, said she used to pay more than $800 for 200 gallons of heating oil that would last only 21/2 months during an especially cold winter. She recalled "putting the oil on multiple credit cards because it was a lot of money all at once."

Earlier this year, the Community Development Corp. of Long Island, a not-for-profit housing group based in Centereach, helped Rubin insulate her attic to cut down on heating costs, and last year she qualified for the federally funded Home Energy Assistance Program, which helps low-income New York residents pay their utility bills.

The falling price of oil "will help me immensely, so I can pay my mortgage," Rubin said.

Retired New York City police Sgt. Mark Schneider of Lake Grove figures he'll save $250 to $300 this year over last with a new, more efficient oil burner and a lower fixed price for oil than last year. "It goes right back into my bank account," the 48-year-old said, "right back into the kitty."

That's probably typical, said Martin Melkonian, an adjunct accociate professor of economics at Hofstra University. He notes wage increases have been small, and costs for pharmaceuticals, insurance, entertainment and education have risen.

"I would guess they're using the savings on energy to pay other bills," he said.

It is worth noting that predictions for a warmer winter in the area are not unanimous.

At the private forecaster Weather 2000, a firm based in Manhattan and specializing in medium- and long-range forecasts for business clients, meteorologist Michael Schlacter says he believes the El Niño effect will be lessened by other weather phenomena in the Pacific and Indian oceans. The result for the New York City region, he said: "colder than normal and snowier than normal, but it's yet to be seen whether we can match what the last two winters did."

-- With Maura McDermott

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