Environmental Services Division

Energy and Waste Management Bureau

For Immediate Release                                                                                                         

November 27, 2007

DNR Contact: Bill Blum (515) 281-6486

Winter Fuels Outlook

Prospects for the 2007-2008 winter heating season in Iowa are mixed.  The U.S. Department of Commerce’s National Oceanic and Atmospheric Administration is forecasting somewhat warmer temperatures compared to an average of recent years.  So Iowans’ winter heating needs look to be relatively moderate.  Natural gas comprises about sixty-nine percent of the heating resources used in this state, twelve percent is propane, five percent is heating oil, and around three percent is ‘other’, which includes wood and even some coal.

Supplies of natural gas over the winter should be adequate because North American production is up slightly compared to last year.  Although per capita heating demand is likely to be a bit less due to the projected milder winter ahead, general economic growth in the region means that average Midwest prices are apt to be about eight percent higher than last year.

Propane and heating oil are derived from petroleum, so their costs are directly impacted by global crude oil prices, which have risen remarkably in the past several weeks.  Total global demand continues to increase incrementally and total crude oil supplies have tended to keep pace.  But speculators have bid petroleum prices up well above what strict supply-and-demand economics would otherwise yield.  This speculation is based on different combinations of guesses on how and when supplies might be significantly cut due to international instabilities – particularly in the Middle East.  Accordingly, propane and heating oil consumers in Iowa face potential costs in excess of what would be more typically expected.

For a range of unanticipated production and consumption reasons, propane inventories are down from last winter, but still probably adequate.  The comparatively lower heating demand due to weather forecasts will only slightly modulate considerably higher prices.  Because of the underlying global costs of the raw material petroleum, actual propane prices in the Midwest could be an average of fifteen percent higher than in 2006-2007.  Similarly, while heating oil inventories in the Midwest are about the same as last year and weather forecasts indicate somewhat lower demand, those prices, as driven by world-wide crude oil costs, might be on average as much as eighteen percent higher than last winter.

Incidentally, electricity carries about eleven percent of Iowa’s heating load.  Electric rates, which are set by the Iowa Utilities Board for the investor-owned utilities, are less related to seasonal fuels variations. Electric generation in Iowa comes mostly from coal-fired plants, with contributions from nuclear, hydro-electric, and wind turbines.  In the Midwest, the average price of electricity is estimated to be about two percent above last year.

Regardless of what means are used for heating, everybody can benefit from investing in energy efficiency.  Iowans should check with their local utility on what programs there might be to assist with such things as adding insulation, installing programmable thermostats, or making buildings tighter against energy losses.  Propane or heating oil suppliers may have deals for locking in prices on multi-month contracts, or discounts on bulk purchases. The Iowa Energy Center has published their Home Series booklets that are filled with everyday energy-saving tips for helping make a positive impact on family budgets.  They are available – free of charge – by:

• Calling utility companies;

• Downloading a copy at http://www.energy.iastate.edu/homeseries/index.html;
• Requesting a copy by e-mail: [log in to unmask]; or
• Phoning to have a copy sent by regular mail: (515) 294-8819.

And, although there are limitations on eligibility and funds provided, Iowa’s Community Action Agencies offer some help with weatherizing homes and with low-income home energy financial aid (LIHEAP).  To find which of nineteen local agencies serve them, interested people need to call the Department of Human rights at (515) 242-5655, or see these websites: for weatherization assistance – http://www.weatherization.iowa.gov/; and for LIHEAP –   http://www.dcaa.iowa.gov/bureau_EA/index.html.

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