Heating fuel stocks hold up as arctic temperatures punish the Midwest and Northeast
Energize Weekly, January 17, 2018
Although much of the nation—from Florida to Michigan to Maine—was punished with frigid temperatures in December and January, heating fuel supplies held up well, according the federal Energy Information Administration (EIA).
“Current cold weather in the Midwest and Northeast United States has put some pressure on winter heating fuel stocks, though EIA’s review that regional stocks are adequate for this cold wave,” the agency’s Winter Fuels Market Update reported.
An arctic blast sweeping across the country set record low, and often below-zero, temperatures from Bangor, Maine, to Vicksburg, Miss., and in dozens of other cities and towns. On Jan. 7, Richmond, Va., posted a record minus 3 degrees Fahrenheit, while it was minus 20 degrees in Burlington, Vt.
A few days earlier, the temperature in Sioux City, Iowa, fell to minus 24 degrees, the coldest recorded temperature in Sioux City in 122 years.
Nevertheless, fuel supplies continued to meet the demand. As of Dec. 29, distillate inventories in the Northeast, the main region in which fuel oil is used for heating, while down from last year, were still above the five-year average.
Distillate stocks in the Northeast totaled 38.7 million barrels, 1.5 million barrels above the five-year average, but 14.4 million barrels below year-ago levels.
Natural gas inventories in working storage were 6 percent below both the five-year average and last year’s level as of Dec. 29.
While inventories are at or below the five-year average in each of the country’s five gas storage regions, they remain well within the five-year range, EIA said.
While inventories were adequate, pinch points in the supply chain have had an impact on prices, the agency said.
“Limitations on capacity for regional natural gas into New England and New York City have resulted in higher prices and increased burning of oil for electric generation,” the market report said. “Major pipelines to the Northeast are full.”
Natural gas prices in Boston reached $83 per million British thermal units (BTUs)—up 128 percent from Jan. 4. New York City prices were up 173 percent to $140 per million BTUs.
At the same time, the price for natural gas at the Henry Hub, the distribution point in Erath, La., was down 38 percent to $4.65 per million BTUs.
An arctic cold front in 2014 created a propane shortage in the Midwest, leading to school closings and emergency orders to help supply the region.
This year, propane inventories at Conway, Kan., where the bulk of Midwest propane stocks are held, are within the five-year range. Conway is the origin point for pipelines to Nebraska, South Dakota, Iowa, Minnesota, Missouri and Wisconsin.
Inventories in Michigan, Illinois, Indiana, Ohio, as well as Iowa, Minnesota and Wisconsin are at or above the five-year average.
“Unless severely cold temperatures in the Northeast coincide with severely cold temperatures in Europe, ample supplies should be available to meet demand, but localized supply issues are possible,” the EIA said.