But you still need to activate your account.
Rita and Katrina. They’re no Dolce and Gabbana, yet everyone is talking about them and the (disturbing) trends they’ve left in their wake.
To heck with a logo bag. At these prices, it seems gas and heating oil are the status items of the season. Glamorous? No. And certainly not as fun as a trip to the mall. But these days, who can afford a trip to the mall? I can’t even afford a full tank of gas.
Contrary to my nature, it doesn’t pay to hop in the car and shop around for gas, but there are ways around that. If you have an AAA membership, you can use the gas price finder at AAA.com. Everyone can use GasBuddy.com, which shows the highest and lowest prices in the area. Simply enter your Zip code and you’ll know gas is $2.64 across the street, $3.05 across town and $6.95 in the County. Kidding. But you get my drift.
Jason Toews of Brooklyn Park, Minn., founded Gas Buddy five years ago after a colleague kept bragging about how gas was 25 cents cheaper per gallon in his neighborhood. He figured there had to be a way for people to know where to find the best prices in town, so he created a local Web site, which has grown to cover the United States and Canada. Users – both consumers and station owners – log in daily to enter gas prices.
“Knowing where to look, you can save 10 to 15 cents a gallon easily,” Toews said.
Of course, knowing where NOT to look is also a bonus. Savvy travelers know to gas up before they hit the road to far-flung locales, but distance from cargo ports isn’t the only reason why gas is more expensive in, say, Houlton than Bangor.
Transport costs range from 3 to 5 cents a gallon. The rest, according to Jamie Pye of the Maine Oil Dealers Association, has to do with volume (a station in Brownville Junction may not sell as much gas as one in downtown Portland, so the owners may pay more per gallon for their shipment); competition (what the guy across the street charges); and what the market will bear.
Because I spend much of my time on the road, rising gas prices have put a serious crimp in my spending. But that’s small potatoes compared with the impact of rising heating oil prices (to understand what factors affect the prices of petroleum products, see sidebar). Like many Mainers, I’m wondering how to get through the winter without running out of oil – or money.
ShopGuy and I decided it would be a good idea to pre-buy or lock in this year, but we were too late – our oil company reserved its last shipment about a month before we made up our minds.
A few companies still offer both services: Pre-buy allows you to reserve a set quantity of oil at a set price. Or, with good credit, you can lock in at a capped price – you’ll never pay higher, but if prices drop below your cap, you’ll pay the lower of the two prices. In nine of the last 10 years, Pye said, this has worked to the consumer’s benefit. Pre-buys are if you a) have a chunk of money saved up; b) like to have your ducks in a row; c) want to eliminate risk; and d) feel confident that prices aren’t going to dip.
I fit into the category of e) day late and dollar short. But I’m not about to switch over to save a few pennies – I love our oil company, the delivery guys know our house and our furnace, and they take care of us. That’s worth more than a service contract, in my book.
Some people are concerned about cash customers (those of us who haven’t signed any paperwork) eating the shortfall between pre-buy prices and current oil prices. However, Pye says a reputable company would’ve reserved a fixed number of gallons at a fixed price in the summer, which would apply when it took delivery of the oil in the winter. In other words, cash customers only pay for their own oil, not someone else’s oil, too.
Oh, and if you think your oil dealer is getting rich off these high prices, think again. It costs more to run the delivery trucks, for starters. And for smaller companies, the impact of a few people paying their bills a few days late can be significant.
“We always make less when the prices are higher,” said Skip Flagg of G.W. Flagg in Brewer. “Even Webber and Dead River. Everybody would be happier if the oil prices were cheaper.”
ShopGuy and I would be much happier if that were the case, but as it stands, we’re planning to get a lot of use out of our propane-fired fireplace this winter. We’re sealing up the sill box in our basement (the area between the foundation and the floor) and running around with cans of expanding foam. We’re banking the foundation. We’ve put in a few new windows, and we’re going to have to put plastic over the rest.
Next year, we’ll be first in line for the pre-buy. But this year? Well, I needed an excuse to go shopping for a few new sweaters…
Energy information and tips
www.meoil.com (Great tips on how to make your home and heating system more efficient)
www.efficiencymaine.com
www.maineenergyinfo.com
www.gasbuddy.com
www.doe.gov (shows you how and why gas and oil prices fluctuate)
http://api-ec.api.org/frontpage.cfm (American Petroleum Institute’s consumer page)
www.aaa.com
Petroleum prices 101
Wholesale gas and heating oil prices change daily, and when there’s a catastrophe such as Hurricane Katrina, they can change as often as every hour. Those fluctuations don’t always make it to the consumer, however.
Many things cause gas and heating oil prices to fluctuate, but the most significant factor is crude oil prices, and those prices are determined largely by trading on the New York Mercantile Exchange.
According to Jamie Pye of the Maine Oil Dealers Association, NYMEx prices are based on the perception of supply and demand in the world economy. Global demand has increased steadily in recent years year, while supply has struggled to keep pace, according to the American Petroleum Institute. When Hurricane Katrina struck, there was a perception of decreased supply because of the number of oil platforms, refineries and crude oil terminals located in the Gulf of Mexico.
When it became clear that oil production capacity in the Gulf was restored to near-normal levels, market prices dropped, and consumer prices followed suit, but not immediately. They still have not returned to pre-Katrina levels, which were already high. Traders predicted a drop in supply in anticipation of Hurricane Rita, and in some markets, consumer oil and gas prices spiked on Friday and Saturday of last week, but by Monday, they had dipped again.
“There is a real and almost instantaneous pricing signal sent by the trading houses of NYMEx,” Pye said. “That’s why this thing is so volatile.”
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