Economic slump helps to push oil prices down

PORTLAND – Mainers who paid close to $1.50 a gallon for heating oil last November now find that prices have dropped as low as 80 cents.

An economic slowdown combined with plentiful oil supplies and warm autumn weather have driven prices down, giving a boost to homeowners struggling to set winter household budgets.

“You put those three things together and there’s a glut of oil,” said Chris Brown, president of Energy Data Corp., which operates maineoil.com, a Web site that tracks daily changes in home heating oil prices.

Prices Friday ranged from a low of 80 cents a gallon to a high of $1.28 among Maine oil dealers tracked by maineoil.com. The average price was $1.14.

Gasoline prices also are lower this fall, providing motorists with savings of more than a dime a gallon over last year.

The Sept. 11 terrorist attacks compounded the effect of the factors pushing down prices, Brown said.

The Coast Guard responded by limiting access to ports, which led to a backlog of tankers waiting to be unloaded. When the ships finally were allowed in, they filled local oil tanks to the brim at a time when warm weather curbed demand for fuel.

The attacks also worsened a looming economic slowdown and led to cutbacks in airline schedules. Less oil was needed to make jet fuel and more was available for heating oil and gasoline.

Brown noted that when the wholesale price dealers pay for heating oil dipped below 80 cents a gallon a few months ago, he thought prices had hit bottom.

“When it was 80 cents, I thought it couldn’t go much lower,” he said. “Here we are below 60 cents [wholesale].”

The situation is similar for gasoline.A year ago, the average price in Maine was $1.62, as prices stayed up after rising through the summer.

The average price in Maine has declined 14 cents a gallon during the past four weeks and prices are still dropping, according to American Automobile Association Northern New England’s weekly survey.

Tom Kloza, editor of New Jersey-based Oil Price Information Service, said that crude oil prices are below $20 a barrel, the lowest in two years, compared to $36 a barrel last November.