Heating oil price soars in state 19-cent increase reported in week

AUGUSTA – The average price of home-heating oil in Maine jumped 19 cents from last week to $1.64 a gallon, the State Planning Office reported Monday.

Prices across the state ranged from a low of $1.40 a gallon in some central sections to as high as $1.76 in parts of eastern Maine.

This week’s price is 54 cents more than one year ago.

Also this week, the price of kerosene went up 18 cents in Maine to an average of $1.86 a gallon.

Propane increased 6 cents to $1.67.

The increase in heating oil prices is a direct result of continued cold weather in the Northeast, disruption of crude-oil imports from Venezuela, low crude-oil inventories and uncertainty over war with Iraq, according to the State Planning Office.

Inventories of home-heating oil in New England have dropped by 2.5 million barrels or about 30 percent in the last month, the state noted.

The New England Fuel Institute last week asked U.S. Secretary of Energy Spencer Abraham to consider releasing oil from the U.S. Strategic Petroleum Reserve to address the shortages and pricing problems, Jamie Py, president of the Maine Oil Dealers Association, said in a press release.

“When there is uncertainty in worldwide oil markets, often the response is to lock down supply,” Py said. “This leads temporarily to demand exceeding supply.”

He said suppliers are reluctant to jump into the market with huge amounts of oil because “the price could drop like a stone at any time,” particularly if a spell of warm weather should develop.

Py said he has not heard of any shortages or supply disruptions, although some oil terminals are on allocation and can get only specified amounts.

Many homeowners are protected from the price rise because they took out contracts before the start of the heating season that included a cap on how high their price could go, he said.

An association survey last winter indicated that roughly half of all customers took advantage of such contracts, Py said. Warm weather last year led to a steep drop in prices, he noted, and that may have led some customers to refrain from locking themselves into a contract this winter.

The Associated Press contributed to this report.