Another winter storm is descending on the East Coast where New Yorkers are paying record prices for natural gas and heating oil. The weeks-long cold snap and continued winter storms are draining fuel inventories and driving up prices.
Cold weather continues to plague U.S. consumers with high costs for heating. The Northeast in particular has been hit hard. Metropolitan New York is now paying record prices for natural gas and heating oil. For the week ending January 31, East Cost stockpiles of distillates, which include heating oil and diesel, dropped to their lowest levels since 1990, according to new EIA data.
Many residential consumers in the Northeast still use heating oil to keep their homes warm in the winter. But the weeks-long cold snap (January was the coldest January in the U.S since 1994) has drained inventories and pushed up prices. EIA estimated that heating oil would average $3.77 per gallon this winter, but recent data from New York suggests pries are surpassing $4.50 per gallon. Refinery outagesin the Philadelphia area, down for maintenance, have also increased prices. (Related Article: Why Current Solutions to Solving our Energy Problems Won’t Work)
The problem is compounded by the shortage of natural gas supplies, forcing many to scramble for heating oil as a replacement. Some customers have “interruptible” contracts, allowing suppliers to cut them off when they are in a pinch.Infrastructure bottlenecks, combined with high demand, led to Consolidated Edison, the local utility, to restrict gas deliveries to these customers to conserve supplies. This decision will force many to look for heating oil as an alternative, in turn pushing up heating oil prices even further. The problem would have been much worse had New York not recently completed gas pipeline connections into the city.
With yet another snow storm brewing, for the East Coast, there isn’t light at the end of the tunnel for New York and New England. The forecast is unclear at this point, but cold temperatures are almost certain, so the strain on energy supplies will continue.