High Oil Prices Fuel Winter Heat Fears
Pastor Dale Morgan
Nov 11, 8:26 PM EST
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High Oil Prices Fuel Winter Heat Fears*
By JERRY HARKAVY
Associated Press Writer
PORTLAND, Maine (AP) -- Nowhere in America, it seems, are people more
apprehensive about the prospect of a $3-a-gallon winter than in Maine.
Motorists nationwide may grumble about gasoline prices now hovering
around $3 for a gallon of regular, but home heating oil that soared this
month to $3.09 a gallon - breaking the $3 barrier for the first time -
is the focus of concern in Maine.
The reasons for Maine's vulnerability are clear:
It tops the list of states most dependent on oil heat, with 80 percent
of homes relying on No. 2 oil or kerosene. It's one of the nation's
coldest states, with the northern city of Caribou often singled out by
the National Weather Service as having the lowest temperature among the
Lower 48. In terms of per capita incomes, Maine is generally ranked as
the poorest state in the Northeast. And lots of older homes lack
adequate insulation, making them harder to heat.
So as heating oil prices hit record levels and the sound of oil furnaces
kicking in becomes more frequent, plenty of people are worrying about
whether they'll be able to scrape up enough money to keep warm.
"It's not just low-income people who are fearful. It's the working
couple or families who are now going to have to choose between heating,
literally eating, and of course driving," said John Kerry, director of
the state Office of Energy Independence and Security.
For families struggling from paycheck to paycheck, the cost of filling a
275-gallon tank can easily blow a hole in the budget.
In Bath, Stacy Crowell, a 29-year-old mother of two whose husband works
at the Bath Iron Works shipyard, turns down the thermostat, puts plastic
sheeting on windows to keep out the cold and compares prices at local
oil dealers before filling the tank.
The family, which burns 800 to 1,000 gallons of fuel a year, does not
qualify for government assistance.
"Our incomes are just over the limit, so we can't get help for anything.
Every program we try for, we're just over it," she said.
With the recent spike in prices, Crowell is wondering how long the
family can afford to remain in the drafty old farmhouse that they bought
five years ago when heating oil was much cheaper.
"We're thinking about selling in the spring because it takes so much to
heat this place," she said. "We can't afford it."
The state, meanwhile, is planning for a worst-case scenario.
Gov. John Baldacci is prepared to convene an emergency task force in the
event that fuel supplies are disrupted and shelters are needed to
accommodate those who have run out of fuel. In the meantime, officials
are pressing Congress for additional money for needy households and are
looking to respond to any signs of price-gouging.
"There's a lot of fear out there," said Judy Frost, who directs the Low
Income Home Energy Assistance program for needy residents in Franklin
County. "Everyone's afraid to speculate about what the prices will be in
January and February when the really cold temperatures set in."
While many recipients of federal LIHEAP money are elderly and on fixed
incomes, Frost and others who administer the program are seeing an
increasing number of applications from the younger working poor who may
not quality for benefits under eligibility guidelines.
"We're finding more and more people applying who are over income because
they're so afraid that they're not going to be able to make ends meet
and pay for oil this winter," said Eleanor West, the LIHEAP director for
Hancock and Washington counties.
The surge in prices has been dramatic.
The state energy office, which conducts a weekly price survey during the
heating season, said its latest average price of $3.09 was up 24 cents
in just one week and was 89 cents a gallon higher than a year ago.
Nationally, the average price was $3.11, according to the Energy
Information Administration. Some 8.1 million of the nation's 107 million
households use heating oil, most of them in the Northeast.
On average, Maine homes burn roughly 850 gallons a year, a cost of more
than $2,600 at current prices.
The higher prices for kerosene, which averages $3.40 a gallon, hit
hardest at many of Maine's poorest households. People in mobile homes,
many in economically depressed rural areas, are forced to burn kerosene
because the less expensive No. 2 oil is subject to gelling in outdoor
tanks when the weather turns cold.
In recent years, many Mainers have insulated themselves against price
hikes by either pre-buying their fuel supply before the start of winter
or signing up for a plan that sets a cap on the per-gallon price.
Last season, however, prices dropped as the winter wore on, leaving
those who opted for a price-protection plan paying more than the cash
price. Even though the plans have been a good bet in most years, last
season's experience prompted many customers to forgo them this time when
they might have been able to lock in their costs at around $2.50.
"What we hear from dealers is that they're down 50 percent. Half the
people probably didn't participate compared to last year," said Jamie
Py, president of the Maine Oil Dealers Association.
Which is the better deal remains to be seen, Py said. Though prices are
high now, they could drop like last winter if the weather is mild.
Despite the sharp rise in prices, Py is confident that everyone will
make it through the winter, even though the state's economy is sure to
take a hit as higher expenditures on heating fuel leave consumers with
less to spend on everything else.
"You have a whole network of social services, churches, state entities
that are out there to help folks get through," he said. "Nobody's going
cold. Everybody gets through the winter somehow in Maine. It's always
been that way."
The dealers association blames excessive speculation and manipulation in
the oil futures market for artificially inflating prices, and Py
suggests that prices could now be at their peak. But like everyone else,
he can't say for sure which direction prices will move this winter and
at what point the system might crack.
"If we start seeing prices reaching $4 or $5 a gallon, which I don't
anticipate, that would require some sort of government intervention to
make sure that people don't go cold," he said.