Fuel Costs, El Niño, & Biofuels: It’s the Direct Energy Buzz for October 2015

With an autumn chill in the air and Halloween fast approaching, the Direct Energy Buzz for October 2015 focuses on two recent energy news items: falling fuel prices and a mighty El Niño, both of which might treat us to lower energy prices (and energy savings!). There’s also one tricky piece of green energy news to discuss – if you’ve ever heard of the old Mischief Night prank of turning over outhouses, then you’ll understand part of what the big stink is all about.

Fuel Costs, El Niño, & Biofuels: It's the Direct Energy Buzz for October 2015

Lower Fuel Costs Could Equal a Lower Heating Bills

Back on October 6, 2015, the Energy Information Administration (EIA) predicted that household expenses for heat this winter would be lower than the last two winters. The reasons are the anticipation of a milder winter (thanks to a strong El Niño, which we’ll discuss next) and lower fuel prices. Fuel prices for heating and electricity (most notably natural gas) stayed comparatively low throughout Summer 2015.

For example, natural gas remained below the $3.00/mmBTu mark since July 2015, due in part to high production and storage rates. Natural gas even briefly eclipsed coal as the main fuel for electricity generation this summer, producing 35% of total generation versus coal’s 34.9%. Coal consumption for power generation is expected to drop to 8% this year due to continued low natural gas prices and lowered demand for electricity for heating this winter.

Fuel Costs, El Niño, & Biofuels: It's the Direct Energy Buzz for October 2015
Just because fuel costs are lower doesn’t mean you can crank up your heater in winter. Being energy efficient can still help you save money on your utility bills.

Fuel prices are not only shaped by production and supply but also by weather forecasts. With this winter being anticipated as warmer than the last two years, commodity futures prices for fuels have kept low. As a result, EIA predicts in its Short-Term Energy and Winter Fuels Outlook that the average U.S. household heating fuel bill will be lower from last winter by:

  • 10% lower for homes that heat primarily with natural gas
  • 25% lower for homes using oil heat
  • 18% lower for homes using propane heat
  • 3% lower for homes that heat with electricity

As an added sugary coating, gasoline prices are also predicted to remain low — hitting an average of $2.03/gallon this December and then averaging $2.38/gallon in 2016.

How “Strong” is This Strong El Niño?

Fuel Costs, El Niño, & Biofuels: It's the Direct Energy Buzz for October 2015

El Niños exhibit degrees of influence over temperature and rainfall. The National Oceanic and Atmospheric Administration (NOAA) says, “A strong El Niño is in place and should exert a strong influence over our weather this winter…” Northern states will have a 50%-60% chance of warmer-than-average winter temperatures while Texas will have a 40% chance of colder than average temperatures. For precipitation, wetter weather in the south, most likely drier in the north.

To be clear, we are really looking at probabilities and not forecast temperatures. For example, the high and low average temperatures for Chicago in February is 38°F and 24°F. The record low is -12°F, the record high is 71°F. Since Chicago is forecast to have a 40% probability of warmer than average temperatures, that means there’s a 4 in 10 chance temperatures will be above the average high and low. It could be one half a degree, it could be 20 degrees. However, if you look at Chicago’s temperatures during the El Niño year of 1998, Chicago’s average daily temperatures were roughly 6 to 15 degrees above average. There were also notably chilly cold snaps in 1998, but these were brief and not like the interminable deep freezes of the past two years.

Yet, while there’s been good energy news, curiously enough this El Niño has been sucking the life out of US wind energy. Wind velocity fell through the summer, reducing output from wind farms throughout the country. To be sure, there is a lot of regional variability. While Southern California wind production fell to 64% of its 2014 levels, output in Texas fell just a few points to about 93% of last year’s generation.

The ENSO Blog says the peak of El Niño is expected to arrive soon after peak pumpkin spice latte season – i.e. really late November or early December.

“They’re Doing WHAT Next Door?”

Sometimes getting a green energy project to work is more trick than treat. The Hometown BioEnergy plant in Le Sueur, MN, owned by Minnesota Municipal Power Agency (MMPA), is having trouble getting up to operational capacity. The Anaerobic Digester (AD) plant burns methane from agricultural waste, and it’s supposed to generate 8 MW of electricity for 12 hours per day. While that sounds like award-winning technology, the plant has only been generating 12% of its rated capacity for only 3 hours/day since it went live in 2013.

And neighbors say the $45 million plant is also a big stinker. Barf-ably bad, in fact.

Under the right conditions, an AD works in a completely sealed environment and emits little if no odor because the manure breaks down into bio-gas and low-odor effluent. The methane is captured to burn, while the remainder decomposes and can be used as fertilzer.

However, AD systems are notoriously challenging to fine tune to reach their highest efficiency. It’s like brewing a fine beer — you need the right amount of water, nutrients, and temperature. The optimal temperature for anaerobic digestion to occur is 95°F. This gets very difficult in upper Midwest states, like Minnesota, which is famous for their bitterly cold winters.

MMPA and the plant’s operator, Avant Energy, expect to have the plant ramp up to full power by 2020. The stink, however, has motivated Le Seur residents to nose about for sources of other odors in the area.

Got any other energy news to discuss from this month? Tell us about it in the comments!


Vernon Trollinger is a writer with a background in home improvement, electronics, fiction writing, and archaeology. He now writes about green energy technology, home energy efficiency, the natural gas industry, and the electrical grid.