Tag: Heating Oil

A Comparative Analysis: Propane vs. Heating Oil

When it comes to heating your home or business, it’s essential to choose an energy source that’s not only cost-effective but also reliable. Two popular options are propane and heating oil. Let’s compare these two energy sources in terms of price, availability, and market conditions. Propane: The Economical Choice Propane, known for its high energy… Continue reading A Comparative Analysis: Propane vs. Heating Oil

When it comes to heating your home or business, it’s essential to choose an energy source that’s not only cost-effective but also reliable. Two popular options are propane and heating oil. Let’s compare these two energy sources in terms of price, availability, and market conditions.

Propane: The Economical Choice

Propane, known for its high energy content, has a significant advantage in terms of cost. Currently trading at 71 cents at Mont Belvieu ETR and 70 cents at Conway, propane stands out as one of the most affordable energy sources available. Apart from natural gas, propane is considerably cheaper than other alternatives, which is excellent news for consumers and businesses alike.

The relatively high cost of gasoline has conditioned consumers to perceive energy prices as high. However, this situation can work to the advantage of propane dealers, allowing them to pleasantly surprise their customers with the affordability of propane. Mild winters in recent years and the absence of expectations for significant changes this winter make it important to maximize margins, and the cost-effectiveness of propane plays a pivotal role in achieving this goal.

Heating Oil: Facing Supply Challenges

In stark contrast to propane, heating oil faces a challenging environment. Propane inventories are at five-year highs, indicating an oversupply compared to demand and resulting in relatively low valuations. However, the situation is quite different for heating oil.

Heating oil, classified as a distillate, has traditionally contained more than 500 parts-per-million sulfur. Recent changes in refining processes to meet lower sulfur content standards for all distillates have significantly reduced the high sulfur content, resulting in a more eco-friendly product. The U.S. Energy Information Administration reports that only around 7 million barrels of the total distillate inventory now contain more than 500 parts-per-million sulfur.

The critical factor in evaluating the heating oil market is to consider overall distillate inventories. The global demand for distillates is high due to the use of these products in generating electrical power when natural gas supplies from Russia to Europe ceased. This global shortage of distillates puts pressure on the supply chain.

U.S. distillate production, while not dismal, has slowed compared to the previous year. As of this point in the year, production stands at 4.744 million barrels per day, down from 4.887 million bpd during the same period last year. This decline in production is not keeping up with the increased global demand, putting additional strain on U.S. distillate inventories.

Moreover, the trend in U.S. exports is upward while imports are on the decline. This shift has further exacerbated the stress on U.S. distillate inventory levels, making it difficult to meet the growing demand. High prices for distillates are likely to be a contributing factor to the decreased demand within the United States.

The comparative analysis of propane and heating oil reveals a stark contrast in their market conditions and supply-demand dynamics. Propane remains a cost-effective option with high availability, making it a favorable choice for consumers. In contrast, heating oil faces supply challenges and high prices, making it a challenging choice in the current market environment.

The future of distillate demand largely depends on the resumption of natural gas supplies from Russia to Europe, which remains uncertain amidst ongoing geopolitical conflicts. Until then, the propane market enjoys a clear advantage as the more economical and readily available heating option.

Growing Price Advantage of Low-Carbon Propane Over Heating Oil in Canada Signals a Promising Future

The Canadian Propane Association has projected that the price advantage of low-emission propane as a heating option will continue to expand in Atlantic Canada. This revelation comes as carbon tax projections indicate that propane, with significantly lower emissions compared to furnace oil, will enjoy lower taxation. Starting on July 1, the federal fuel charge’s carbon… Continue reading Growing Price Advantage of Low-Carbon Propane Over Heating Oil in Canada Signals a Promising Future

The Canadian Propane Association has projected that the price advantage of low-emission propane as a heating option will continue to expand in Atlantic Canada. This revelation comes as carbon tax projections indicate that propane, with significantly lower emissions compared to furnace oil, will enjoy lower taxation. Starting on July 1, the federal fuel charge’s carbon tax on propane will be 7 cents per liter less than the charge on furnace oil. By 2030, this difference is estimated to reach about 19 cents per liter, illustrating the long-term financial benefits of choosing propane.

The impending federal fuel charge, projected to reach $170 per tonne by 2030, will result in a carbon tax of 45.57 cents per liter on furnace oil. In contrast, the tax on propane will only amount to 26.30 cents per liter. This growing price discrepancy reinforces the cost-effectiveness of utilizing propane for heating purposes.

Moreover, the implementation of the Clean Fuel Regulations will provide an additional advantage to propane pricing. By 2030, Atlantic Canadians will witness the full impact of these regulations on furnace oil prices, with an expected increase of 16 cents per liter, bringing the total to 61.57 cents. However, propane, as a gaseous fuel, remains exempt from the Clean Fuel Regulations, further solidifying its favorable pricing position. By 2030, the carbon tax on propane is estimated to be over 35 cents less than that imposed on furnace oil. To ensure a sustainable future, the Canadian Propane Association is actively exploring ways to enhance propane’s decarbonization, securing its position as an affordable and low-emission energy source for Atlantic Canada.

It is worth noting that, unlike the federal fuel charge, the Clean Fuel Regulations do not offer offset payments to consumers to mitigate price increases.

Shannon Watt, President and CEO of the Canadian Propane Association, emphasized the importance of expanding the use of propane to maintain affordable home energy amidst the rising costs of essential goods and services. Watt expressed the readiness of the propane industry to collaborate with governments, ensuring that Atlantic Canadians can fully benefit from the advantages of propane as a clean and cost-effective energy solution.