Deep Freeze in U.S. Creates Heating Squeeze for Homeowners and Utilities
Posted January 3, 2018 8:05 p.m. EST
Updated January 3, 2018 8:08 p.m. EST
Homeowners, businesses and utilities across much of the United States were keeping a close watch on fuel supplies Wednesday as a record-setting cold snap caused demand for heating oil and natural gas to soar.
With heating units in homes and commercial buildings running furiously to fend off the deep freeze, power companies warned of possible fuel shortages to come. Many utilities turned to coal and oil to generate electricity as the price of natural gas, their usual fuel of choice, surged.
“The sustained cold is requiring round-the-clock usage of some of these oil-fired generators, and some are already running short on fuel,” said Marcia Blomberg, a spokeswoman for ISO New England, which operates a regional grid and wholesale power markets.
Local heating-oil companies described being run ragged trying to meet the needs of those trying stay warm. Rhoads Energy of Lancaster, Pennsylvania, said it had gotten 3,816 calls for customer visits on Tuesday, up from about 900 a day in the past couple of weeks.
“Demand has just been incredible,” said Jennifer Goldbach, the company’s vice president of business development.
The Federal Motor Carrier Safety Administration, responding to what it said was an “anticipated home heating fuel shortage,” declared a regional emergency for large swaths of the country, allowing commercial drivers to work overtime delivering propane and heating oil. And Coast Guard ice cutters were working to clear paths for oil tankers and other vessels on the Hudson River and other frozen waterways in the Northeast.
Weather forecasts suggested the chill would stick for a while. As of Wednesday, a “powerful nor’easter” was bearing down on the East Coast, most likely bringing snow, ice, rain and strong winds, according to the National Weather Service. Some forecasters spoke of a potential “bomb cyclone” off the New England coast — essentially, a storm that could feel like a winter hurricane.
The impending snow and ice were expected to deplete road department salt supplies. In New Jersey, the Department of Transportation had used 104,000 tons of South American salt, 254,000 gallons of liquid calcium and 564,000 gallons of brine to clear roads as of Dec. 31. By the same point last winter, the agency had used less than half that in salt and liquid calcium and just over half in brine.
Households were paying more to cope with the plunging temperatures. The cost of residential heating oil at the end of December surged 13 percent, to $2.92 a gallon, compared with the same period in 2016, according to federal data; prices in Connecticut and Rhode Island exceeding $3 a gallon.
Consumers were in a “panic,” said John Cardinale, president of Pilgrim Oil Group, a sort of energy co-op that contracts with dozens of heating-oil providers along the Eastern Seaboard. On a normal winter day, Cardinale said, the Pilgrim network might get 250 calls from homeowners seeking heating oil. On Tuesday, he said, more than 700 calls came in.
“You feel bad for people — this cold snap caught everyone off guard,” he said. “They’ve called almost every other company, and anyone we can help, we’re helping, but we’re so booked ourselves.”
Farther south, thousands of Duke Energy customers in North and South Carolina were without power for parts of the week, according to the utility’s online outage tracker. The South Carolina Electric & Gas Co. appealed to customers to scale back their energy use as a precautionary measure “as extreme cold temperatures in the area put a strain on the company’s electricity system.”
For utilities, the shale-drilling boom of recent years made natural gas a primary fuel for generating electricity, as prices dropped and supplies grew. But a limited network of pipelines and an increase in exports has squeezed supplies in some parts of the country.
Withdrawals from the natural gas inventory in the last week of 2017 likely reached 219 billion cubic feet, nearly three times the amount taken out a year ago and more than double the five-year average, according to projections by analysts surveyed by S&P Global Platts, an energy-analytics provider.
The roaring demand for the natural gas this winter is driving prices higher than the standard seasonal bump, analysts said. Other fossil fuels are becoming more attractive by comparison.
ISO New England said coal and oil had helped generate nearly 35 percent of the power provided by generators in the region as of Wednesday, with natural gas generating 24 percent. In the past, natural gas has typically accounted for nearly half of the area’s electricity, followed by nuclear power, hydroelectric and other renewables; coal and oil together were responsible for less than 3 percent.
“The mix is changing with this cold weather,” said Jacob Kilstein, an analyst with Argus Research, an investment research firm. “Because natural gas prices are rising, coal and oil are reaching in to take its place.” PJM Interconnection, which oversees the Mid-Atlantic grid, estimated that demand for electricity would reach 135,787 megawatts Wednesday, nearing its record winter load of 143,129 megawatts, which was recorded in February 2015.
The icy weather is taxing oil supplies to the hilt, Blomberg, the ISO spokeswoman, said.
Inventories of commercial crude oil slid in recent weeks, falling by more than 50 million barrels year over year in late December, according to federal data. When used to generate power, crude oil is also subject to air emissions caps set by environmental regulations.
“As oil inventories are depleted, replenishment of these fuels will be important given the uncertainty around weather and future fuel demands for the remaining two months of the winter period,” Blomberg wrote in an email.
The price of gasoline, which is used in generators as well as in vehicles, rose in 41 states over the past week, according to GasBuddy.com. The $2.49-a-gallon price was the highest for the start of a new year since 2014.
The home-supply chain Lowe’s is redistributing products such as pellet fuel, firewood, rock salt and snow shovels from distribution centers in warmer parts of the country to warehouses and stores in the Northeast, said Jennifer Popis, a spokeswoman for the company.
The demand for heating products in particular, she said, was “incredibly strong.”