Slide 10 of 19
- The outlook for heating oil costs this winter, due to high crude oil costs and tight heating oil supplies, breaks down to an expected increase in heating expenditures for a typical oil-heated household of about $300 this winter, the result of a 25% increase in average price and a 11% increase in consumption. The consumption increase is due to our expectations of normal winter weather this heating season, about 10 percent colder than experienced last year.
- Last winter, under less stringent overall conditions than those developing or already in place at this time, Northeast heating oil (and diesel fuel) markets experienced an extremely sharp spike in prices when a severe weather situation developed in late January. It is virtually impossible to gauge the probability of a similar (or worse) price shock recurring this winter, and, as usual, we have omitted any such development from our base case. But, compared to almost any previous situation for this time of year, that probability is undoubtedly high.