COURT HOUSE – According to the Office of the New Jersey State Climatologist, statewide average temperatures in December were the third warmest on record. That trend may have saved many residents a great deal of added expense, as home heating fuel prices rose significantly over their levels a year ago. The weather has now turned colder, and the prices are still higher than last year.
In New Jersey, the average price of heating oil is 34% higher than it was a year ago, moving from $2.67 a gallon in January 2021 to $3.59 in January 2022. Propane has moved from a January 2021 average of $3.08 to $3.60 this year.
In November 2021, the New Jersey Board of Public Utilities (NJBPU) approved rate increases for residential gas customers. The increases were approved in response to what was described as “volatility in the wholesale gas market.” For South Jersey Gas, the increase is said to amount to $15 a month for a home that uses 100 therms.
According to the U.S. Census Bureau, the distribution of residential heating fuel in New Jersey is heavily weighted to natural gas. Gas has a 75% share of home heating in the state. Electricity follows at 14%, oil at 7%, propane at 2%, and some other type or none at 2%.
Any rise in the cost of natural gas is also likely to be reflected in increased charges for electricity since a large number of electric generating plants in New Jersey are fueled by natural gas. The discussion on the rate hikes before the NJBPU noted that volatility in gas prices will continue, with winter temperatures being a key in demand and prices. The U.S. Energy Information Administration (EIA) projects natural gas prices could rise 27% over the winter.
Averages are just that; actual prices will occur on both sides of the mean. One local company that delivers heat oil in Middle Township and neighboring locales becomes a case in point.
In November 2020, during the pandemic economic downturn, 150 gallons of home heat oil went for a price of $1.64 a gallon. That same company in November 2021, just two months ago, would deliver the same 150 gallons for $2.95 per gallon. That amounts to an 80% increase year to year. Yet, the prices in both instances were below EIA reported average retail prices in New Jersey.
That same local company in November 2019, the year prior to the pandemic, would deliver the same 150 gallons at a price of $2.49 per gallon, which makes the price today 18% higher than it was in the same month in the year before the economic slowdown. Prices are higher, but comparisons to the deflated prices in 2020 can be misleading.
One sign of hope for winter was the recent December drop in futures prices for natural gas. That drop followed revised national weather predictions of a warmer than expected winter. The predictions sent the futures market down.
What does it all mean? That isn’t at all clear. Home heating will most probably be higher, perhaps significantly so, when compared with the pandemic winter 2020-2021. The economy is in rebound and demand for energy is exceeding supply.
Bank of America analysts have projected a continued rise in the price of a barrel of oil, which will impact home heating and gasoline prices. The pandemic’s unpredictable impact on the economy, world supplies, snarled supply chains, and weather uncertainty all play a role.
For those who qualify, assistance programs are in place to help with the increased cost of heat. The state’s 211 line is always open to help point individuals to the programs for which they may qualify. The 211 website also lists many of the energy and utility assistance programs.
To contact Vince Conti, email vconti@cmcherald.com.
