Heating fuel prices likely to stay lower Maine oil levels projected to meet consumer demand

BANGOR – Maine should have more than enough heating fuel to get through this winter, according to a report released by the federal government Thursday.

A 20 percent decline in jet fuel consumption since the Sept. 11 terrorist attacks has the Energy Information Administration of the U.S. Department of Energy predicting a “strong likelihood” that the petroleum previously slated to be used for jet fuel will be used to make heating oil.

Energy prices already had been coming down before Sept. 11 because of low oil prices and sagging energy demand resulting from a declining economy, the Energy Department stated in its annual winter fuels outlook.

In addition, current production, imports and inventories – including those in Maine – are above levels at this time in each of the last two years, and are projected to meet consumer requirements even if colder-than-normal weather occurs, according to the report.

“Under normal weather assumptions, relatively weak demand and generally ample fuel inventories portend sharp reductions in fuel prices compared to last winter’s,” the report stated.

The federal government believes energy prices, from gasoline to heating fuels, will continue to be sharply lower than this winter. Even in the middle of winter, the Energy Department estimated that the average price of heating oil would be $1.19 per gallon. The price of propane will be $1.13 per gallon.

Nationally, gasoline prices are projected to decline to less than $1.35 a gallon on average. The average price has dropped 11 cents a gallon nationally since the Sept. 11 terrorist attacks. In the Bangor area, gas prices have dropped anywhere from 3 cents to 6 cents while wholesale prices have dropped around 11 cents, based on a review of street-displayed prices and a tracking of the wholesale market by the Bangor Daily News.

But EIA officials are telling consumers not to hold them to their report. Prices may continue to fall or could go up again. It all depends on what the federal government intends to do regarding the Sept. 11 attacks on America, according to the report.

“Tension in world oil markets, due to anticipated U.S. military action in response to the Sept. 11 terrorist attacks in New York and Washington, has added an obvious dimension of uncertainty to any particular view of winter oil prices,” the report stated. “We assume that expressed levels of support and cooperation for U.S. actions by the international community, including members of OPEC, include a willingness to at least maintain the level of oil supply that existed or was anticipated prior to Sept. 11.”

For Maine’s lower-income households, a decline in heating fuel prices compared to the last two years will afford them the opportunity to buy more this year compared to past years.

Most of the state’s poor are not able to take advantage of the lock-in supply-price plans offered by fuel suppliers, said Jo-Ann Choate, program manager of the Low Income Home Energy Assistance Program with the Maine State Housing Authority. To sign up for the programs, most need the up-front cash to pay the distributors and they don’t have it.

“We want to be able to offer that kind of option to low-income households,” Choate said. “But LIHEAP funds don’t come into the state until winter. A lot of our customers can’t do that unless than have money in hand.”

Many of the state’s poor, though, still are having difficulty paying utility bills from last winter, according to U.S. Sen. Susan Collins. On Thursday, Collins, along with Sen. Jack Reed, D-R.I., urged President Bush to release $300 million in emergency LIHEAP funds to help the nation’s low-income households pay their utility bills.

“In July, Congress approved $300 million for this use, however, the [Bush] administration has not yet released the money to states,” Collins and Reed said in a joint statement. Both serve as co-chairpersons of the Northeast-Midwest Senate Coalition.

“The state currently has no LIHEAP funds available to help eligible families be reconnected,” Collins said. “Winter is rapidly approaching in Maine, temperatures have plunged to the lower 30s and some families are without heat.”

An increase in the number of consumers signing up for the lock-in price-supply plans, though, is bringing stability to Maine’s heating oil markets, according to the Maine Oil Dealers Association.

More than 60 percent of heating oil users are on a plan instead of taking a risk that prices in the winter months may go up, said Gene Guilford, MDOA executive director. Three years ago, when heating oil prices were at the lowest in recent history, only 25 percent arranged to buy heating oil ahead of time.

“When prices are low, [consumers] don’t care,” Guilford said. “However, 18 months later, they certainly changed and people got a wake-up call.”

Guilford said a commitment by consumers on how much heating oil they are going to need is helping the major distributors lock in wholesale prices and supplies, thus lessening the demand to go out and buy more at a higher price during the winter months.

Consumers worried that heating oil prices will fall below their lock-in price shouldn’t be concerned, Guilford said. The plans, he said, are similar to buying insurance. Plus, the prices could go up.

“Insurance is to maintain stability,” he said. “It’s not to guarantee you’ll make out in every instance. You don’t need to live with prices that go up and down if you don’t want to. Which position do you want to be in? Do you want to guess or do you want to know?”