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Time to turn up the biodiesel heat—literally

A comprehensive overview of several heating oil and related biodiesel news items that bode well for oilheat consumers moving into the winter season
By Ron Kotrba | October 07, 2015

Northwest Minnesota saw frost this morning. I woke up to temperatures in the upper 20s, meaning it’s time to start thinking about calling my co-op and getting a shipment of biodiesel-blended heating oil delivered. I dipped my tank two days ago, anticipating the inevitable change in seasons, and I was surprised to see I had about 50 gallons in my outside tank remaining from last spring, which means my small, 35-gallon inside tank in my basement is still full. I haven’t had to turn on the furnace yet though. In the meantime, I’ve been using a radiant heater and building up inventory for my wood stove by cutting up dead, fallen trees on my property, and splitting more logs. I use the wood stove when I’m home for a few days at a time. Of course, it’s not as easy as turning the dial (yes, I have an old dial thermostat) on the wall and hearing the “click, click, click,” and ignition of the oilheat burner.

There’s quite a bit of good news for oilheat users heading into this winter. The National Oilheat Research Alliance issued a press release yesterday stating that homeowners who heat their houses with heating oil will see lower prices this winter, and for the foreseeable future. The reason? Dramatic increases in production combined with ample and increasing inventories have driven the price of home heating oil down to levels not seen in years, the organization stated.

“Prices have dropped across the entire heating oil marketing footprint,” NORA stated in its release. “Heating oil closed on the NYMEX Oct. 2 approximately 15 percent lower than the same time last year, and almost half the price at the close of Oct. 4, 2013—just two years ago.”

According to the New York State Energy Research and Development Authority, heating oil prices statewide on Sept. 14 are lower by $1.20 per gallon than the same time last year, a 31.9 percent reduction. New York is the largest heating oil consuming state.

Maine, the state with the highest percentage of oil heated homes, is showing an average state-wide price of $1.99 per gallon on Sept. 21, the lowest heating season price recorded for the past 10 years.

“It is a really exciting time for oil heating customers,” said John Huber, president of NORA. “Prices are low and the oilheating industry is transitioning to a superior fuel product. By adding biodiesel, a renewable, carbon-neutral fuel to low-sulfur heating oil, heating oil retailers are actually delivering a better product at a significantly lower price. What could be better?”

Two prime movers forcing the drop in prices, according to NORA, are increased production and full inventory stocks. “With the U.S. now the world’s leading petroleum producer, production in 2014 showed a 34.6 percent increase over 2012 and the first seven month of 2015 show an increase of 11.5 percent over 2014,” the organization stated. “The combination of increased shipments from the Gulf Coast, higher refinery runs and imports have boosted East Coast distillate inventories to 5.4 million barrels above the five-year average for the week ending Sept. 11, the highest since 2011. On Sept. 18, the distillate inventory was at 59 million barrels.”

NORA stated that for the 8 million U.S. households that use heating oil, proper maintenance and tune-ups of their heating system can save from 5 to 10 percent in heating oil costs, while upgrading an older heating system to a new high-efficiency system may save 30 percent or more. Personally, when I reinsulated my house and installed new windows, I saved a ton in heating costs.

Interestingly, at the same time NORA released the above information, my friends at Dennis K. Burke Inc., Ed and Kelly, noted in an article post that crude oil jumped nearly 7 percent total early this week, up to $48.53/bbl. As a result, ULSD closed up more than 6 cents to $1.6115.

Why? According to the article, Russia and its proposed meeting with the Saudi’s on energy projects and outlooks has caused the price move, in addition to other factors. I recommend reading the article.

Moving back to the topic of bio heating oil, as I said above, I still had about 85 gallons total of biodiesel-blended heating oil left from the spring. This is a normal situation with heating oil—having product left over to bake in the tank all summer long. It’s one of the reasons the German biodiesel quality management association AGQM is conducting its new no-harm tests for bio heating oil stabilizers. Due to long storage times, high values for these parameters (total acid number, sulfur content, alkali metal and alkaline earth metal content) in heating systems can lead to more serious problems than in the fuel sector, Andrea Seifert with AGQM told me. For the whole article, which quickly became a top-read story on our website after I published it last Friday, click here.

Finally, as we move into the heating season, it’s good to be reminded that NORA published a paper this spring on the utilization rate and analysis of the use of biofuels in oilheating equipment. 

The new report, titled, “Developing a Renewable Biofuel Option for the Home Heating Sector,” was released May 13 and is most comprehensive report of its kind. 

Among other items, the report shows that biodiesel blends at 20 percent with ultra-low sulfur heating oil are lower in greenhouse gas emissions (GHG) than natural gas when evaluated over 100 years, while blends of 2 percent (B2) or more are lower in GHG than natural gas when evaluated over 20 years.

Biodiesel blended at 5 percent would require approximately 300 million gallons of biodiesel produced per year. So just because you may use a low level of biodiesel in your heating oil, don’t think that it’s not important—because it is.

The report also notes that studies on the operation of Bioheat on the basic burner operation with biodiesel blends at B20 (at least) is the same as with unblended heating oil.

So as we move into this heating season, I’m reminded of the old adage: wood warms you three times—when you cut it, when you split it, and finally when you burn it. If you want to be warm right the first time, I suggest you call your Bioheat dealer and turn up the dial.