- The Washington Times - Tuesday, September 29, 2009


Homeowners who heat with oil were feeling sticker shock just more than a year ago as prices soared close to $5 a gallon, but they’re breathing easier now.

Heating oil prices are barely half what they were in summer 2008 - and while prices might go up and even exceed last winter’s, nothing indicates any severe spike this winter.

Those who heat with natural gas and propane can expect dramatic drops, while electric heat is projected to cost slightly less.

A little more than a year ago, William Foss paid more than $500 for 115 gallons of heating oil in his Portland home. The price was $4.52 a gallon, and he feared it would keep going up. Mr. Foss, 62, had recently lost his job and his wife had died.

But he got help from a local nonprofit’s home energy assistance program. And in the past six months, he’s paid just $2.13 to $2.33 a gallon for three oil deliveries. While he’s feeling better about the outlook for oil prices, he’s preparing for the worst because colder winters and heavy reliance on oil heat make the Northeast vulnerable to high energy costs and price spikes.

“Something could happen in the next month or two that everything starts going the other way or it could go down,” Mr. Foss said.

“If we all had a crystal ball we could look in, we would know what’s going to happen. But we don’t.”

When crude oil prices surged to nearly $150 a barrel in summer 2008, heating oil prices rocketed to record levels. In Maine, where nearly 80 percent of households have oil heat, many people signed contracts locking in rates at more than $4 a gallon for the 2008-09 winter.

Mike Shea, president of Bangor-based Webber Energy Services, said many of his oil customers signed the contracts in panic. Prices were rising fast and people were scared.

But prices plunged as fast as they rose, falling by more than half during the winter - with many homeowners forced to pay the higher contracted prices.

For October 2009 through March 2010, the Energy Information Administration (EIA) projects the average cost of heating oil will go up to $2.71 per gallon, from $2.63 for 2008-09 - with average household expenditures up 1.4 percent nationwide. About 8 million U.S. households - roughly 7 percent - are heated primarily with oil, the EIA says.

Heating oil prices have remained relatively low this year and avoided the wild price swings that plagued the market the past couple of years. In Maine, the average price this year has ranged from $2.06 to $2.42 a gallon, according to the state Office of Energy Independence and Security.

“We’ll never get back down to the $1-a-gallon era. But the main thing is, it’s stable,” Mr. Shea said. “The volatility and wild swings are difficult for people to plan around.”

Nothing on the horizon suggests sharp price increases in the months ahead. Heating oil inventories are above average and hurricane activity hasn’t disrupted oil production in the Gulf of Mexico, said Neil Gamson, an energy economist with the EIA.

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