We have heard all too often that heating oil is a fuel of the past. On occasion that has included voices within our industry. A variety of data points from this issue of the magazine would suggest that heating oil is nowhere near needing an obituary.
For starters, we have the price issues between heating oil and natural gas. Historically heating oil has been as, or more, competitively priced than natural gas. Unfortunately, frack- ing and shale production led to plummeting gas prices while oil has stayed high. However, the United States is producing a considerable amount of oil through this technology as well. OPEC had been holding firm, keeping oil prices propped up, but this supply pressure has finally forced major cracks in the OPEC alliance. Suddenly, market share and preserving markets have become more important than propping up prices, and prices are dropping rapidly (see the Heating Season Fuels Outlook Update for more details).
Obviously, with the abundant natural gas that is also online natural gas prices retain considerable downward pressures as well, and oil will only drop so far and will likely not reach the $20 per barrel range you saw in the early 2000s. But, America is also becoming an exporter of natural gas, distillate and quite possibly crude oil itself. The impact all of these factors will have on the domestic supply and pricing of all fuels will have to shake itself out, as will the critical infrastructure issues that generated the higher gas prices (both NG and LP) that were present last winter. The positive take away is that while there is no certainty on the price front going into the future, that also includes a continuation of the extreme price disparities seen in the past few years.
On the environmental front, the industry is working, with the aid of a newly reautho- rized and revitalized NORA, to be a player in the low-carbon future—an issue important to many of the industry’s customers and a traditional attack point for the natural gas utilities. A mixture of biodiesel and ULS conventional heating oil can burn cleaner than natural gas. Brookhaven National Laboratory’s Tom Butcher provided an in-depth look at the “Future of Energy” at the recently held 2nd OESP Roadshow (see our coverage on pg. 36), that outlines how the industry can play a leadership role on the energy front in coming decades. A germane point he made is that we have to stop being so modest about telling the exciting and proactive story our industry has on such issues.
On the technology front, there are exciting things to explore outside of heating appliances and new fuels. There are operational technologies that allow us to become more efficient and effective at serving our customers. We will not be alone in exploring these opportunities, but by no means do we have we to be behind in these efforts. FON columnist Shane Sweet explores what a service call could involve using “Google Glass” technology (see pg. 30). Such technology can easily level the playing field between big players and small, oil dealers and gas utilities. Even if all sides use the same basic technol- ogy the operation that is smarter and faster and more effective in fielding the technology gains the advantage—particularly when combined with the industry’s tremendous strength in customer relationships.
So yes, things are looking up. But there should be no complacency. It’s hard to foresee a full return to the old dynamics. But it’s also hard to foresee an amplification of what had become the new marketplace, either. Efficiency, diversification and customer service are still critical to future success.But that future is a bit brighter now.