Since 1999 we've achieved discounts of up to 50¢ a gallon on oil and kerosene, and from 50¢ to $1.00 on propane. Though for the 2006-2007 year we again offered excellent discounts on propane, for the first time since 1999 our oil savings were much less significant.

What happened?? In a nutshell, Mother Nature. Every once in a while the eastern Equatorial Pacific Ocean warms up drastically without any warning. The last major episode was 1997-98. This is called an El Nino. The result is a change in the direction of the jet stream which cancels out the hurricanes in the Caribbean due to wind shear ( a good thing), creates flooding in the south and Pacific shore (a bad thing), creates drought in parts of the US (bad), and creates much warmer than normal weather in the Northeast (good since you use less oil).

Oil prices hit a record $78 per barrel in July 2006 (We bought earlier at an average $63/BBL). The first report from NOAA (National Weather Service) appeared Sept 13, 2006, long after the major oil companies (and us) bought their supplies. Speculators lost oodles of money and dumped their positions due to the predicted warm weather and no hurricanes. That caused the drop in prices this fall and early winter. With the return of cold weather, prices are climbing now..

What about next heating season, 2007-2008??

NOAA now says the El Nino is ending as of the January 11, 2007 report. We have an equal (50/50) chance of normal cold weather or slightly above average temperatures from this point on. A "normal" hurricane season (like the year before) and normal winter are predicted for next fall.

We expect lower prices this year if we buy before hurricane season, especially if speculators stay out of the market after their huge losses. The market will return to a more stable time when dealers can actually predict prices based on fundamental supply and demand, rather than be blindsided by the big price swings engineered by big money speculators.

Sources:

What Is an El Nino??http://www.pmel.noaa.gov/tao/elnino/nino-home.html

Picture of theJetstream: http://www.pmel.noaa.gov/tao/elnino/report/figure19.html

First  El Nino Release 9/13/06: http://www.noaanews.noaa.gov/stories2006/s2699.htm

NOAA predicts mild winter: http://www.noaanews.noaa.gov/stories2006/s2716.htm

El Nino kills hurricanes Nov '06 http://www.noaanews.noaa.gov/stories2006/s2748.htm .

Current forecast Jan 07: http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/index.html

By the way, “Energy Basics” by the US DOE is a great site for a child doing a paper on energy. It’s all there.