November 15, 2024
Business

Weather spurs heating oil price increase Spike less severe than last year

An early cold snap has caused a jump in heating oil prices as furnaces have been working overtime to keep Mainers warm now that winter has unofficially arrived.

Dealers in the midcoast region said Wednesday that demand there has not been as dramatic as this period last year when rumors of war in Iraq were blamed for a price spike.

Prices in the midcoast on Wednesday ranged from $1.329 per gallon at Thompson’s Oil Co. in Waldo to $1.429 at Maritime Energy in Rockland. Three weeks ago heating oil was selling for about 8 cents per gallon less.

“The last couple of weeks have been colder, and that does tend to influence the price a little,” said Dave Thompson of Thompson’s Oil. “But prices are really a reflection of world and national inventories. Supply and demand. If the inventories are up, the prices go down, if they are down, the prices go up.”

Still, the increased demand during the cold snap has already drained the coffers of the federally supported Low Income Home Energy Assistance Program, known as LIHEAP. The federal government awarded the state $14 million to help low-income residents pay their heating bills through December, but officials are having a difficult time meeting growing demands.

That has prompted the state’s congressional delegation to call for the release of additional LIHEAP funds.

Sen. Susan Collins said Wednesday she has written to the U.S. Department of Health and Human Services, requesting additional federal funding.

According to the Energy Information Administration, prices for all forms of energy have increased significantly since last year. Prices nationwide this year are 30 percent higher for natural gas, 60 percent higher for heating oil, 25 percent higher for propane and 11 percent higher for electricity.

Susan Ware of Maritime Energy in Rockland said the cost of propane has remained relatively level. Ware said many more people heat with oil than propane, although the company has noticed an increased use of propane to heat apartments in recent years.

“There are a lot of variables that actually drive the [oil] market,” she said. “A lot of things can happen to drive prices. Hurricanes and storms can shut down [offshore drilling] platforms and slow production. Events overseas can cause uncertainty. It’s like the stock market. A lot of it is based on anticipation of what is going to happen. It’s pretty much buying on the futures market.”

Most heating oil is contracted in advance each year and all of the dealers contacted Wednesday said their supplies were secure through the end of winter.

Thompson has been in the business in Waldo for 15 years and is used to the fluctuations. He said he tries to stress service rather than compete on price with the larger oil dealers. He said most customers are satisfied as long as their deliveries are frequent and their furnace keeps the house warm.

“For us, we’re trying to service our customers as best we can. If you call us out on Christmas night, we’ll be there either with a fuel delivery or to service your furnace,” Thompson said.

Josh Leach and his father, Robert Leach, run Leach’s Garage and Oil on Islesboro, where they have the job of making sure that approximately 400 of the 600 year-round customers on the island get a steady supply of oil. Even on an island where a number of home owners have installed double fuel tanks to make sure they don’t run out, winter for the Leaches is a busy season.

“We’ve got a lot on automatic delivery just to make sure we can keep ahead of it and make sure nobody runs out,” Josh Leach said. “There’s a lot of pressure, especially when it gets cold like this. It’s kind of a stressful thing.”


Have feedback? Want to know more? Send us ideas for follow-up stories.

comments for this post are closed

You may also like