Tracing the rising cost of home heating oil

With heating oil prices continuing to climb this year, many homeowners in Maine are asking why.

According to the State Planning Office and the Maine Oil Dealers Association, the answer is one of cost. Last year, crude oil from which home heating oil is refined cost about $18.25 a barrel. This year, with increased tension in oil-producing regions, the price is about $24.50 a barrel.

The increase in the per barrel price has pushed the price of the home fuel higher than it was during all of the last six-month heating season that ran from Oct. 1, 1995, to March 30, 1996.

To illustrate how the price of oil changes as it goes from the drilling field to the homeowner, the MOD has supplied the following example:

At $17 a barrel, the cost of producing a gallon of crude oil is about 40 cents. Transportation of that crude from the drilling field to a refinery by tanker adds another 4 cents a gallon to the cost.

Refining adds 3 cents more, and processing and storage contributes another 5 cents.

Transportation by tanker from refinery storage to a local or regional terminal adds yet another 3 cents a gallon onto the price. At that point, what was orignally 40 cents a gallon has gone up to 55 cents.

After the retailer buys the oil, another 25 cents to 27 cents is added to cover payrolls, transportation and maintenance costs, utilities, and federal and state regulations.

The final cost to the consumer is 82 cents a gallon.