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Warm winter creating heating fuel glut

John Dimsdale Jan 30, 2012

Adriene Hill: We don’t usually do the weather — but here’s the Marketplace forecast for the week: warm. At least warmer than usual in a whole lot of the country.

John Dimsdale reports the higher-than-average temperatures have cooled the price of heating fuel.

John Dimsdale: Kyle Cooper tracks fuel supplies as managing director of research for IAF Advisors in Houston, where he says temperatures have routinely been in the 70s this January.

Kyle Cooper: It’s not so fun in July and August, but in the winter, yeah, it’s not bad.

This winter’s lower than normal demand for heating fuels like oil and natural gas is creating a glut. In fact, Cooper says the surpluses could become what he calls catastrophic.

Cooper: We’re on a path to actually exceed storage capacity by October or November. There’s a chance there’s literally no more room at the inn.

The price for natural gas has dropped by 50 percent since September. That helps electricity generators and refiners of gasoline.

Cooper: The U.S. is now a net exporter of both gasoline and diesel fuel as a result of the competitive cost advantage that U.S. manufacturers now have as a result of this cheap natural gas.

Right now, Americans are paying about $2.50 for natural gas that costs Europeans $10.

In Washington, I’m John Dimsdale for Marketplace.

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