Heating oil prices hit record, expected to rise further still

PORTLAND – The average price of heating oil in Maine has broken an all-time record dating back more than 25 years.

The state’s average oil price hit $2.78 a gallon in October. That is 11 cents higher than the annual average high – adjusted for inflation – reached in 1981, according to calculations done for the Portland Press Herald by the U.S. Energy Information Administration.

And prices are going higher, according to weekly oil price surveys done by the State Planning Office. The average price statewide hit $2.85 a gallon in last week’s survey, which was 65 cents a gallon higher than a year ago. Kerosene was averaging $3.24 a gallon, or 58 cents higher than last year.

The run-up in heating fuel prices is being driven by record crude oil prices.

The increase is even prompting the Energy Information Administration to revise its winter fuels outlook. The agency last month projected that heating oil prices would rise but might ease a bit by January, but that hope is expected to disappear when the EIA updates its national outlook this week.

“It will be different,” said Paul Hesse, an EIA information specialist who carried out the Press Herald’s heating oil calculations. “Actual prices will be higher than what we forecast in October.”

The impact of high fuel prices already is being felt through Maine’s economy. Fuel prices are an important economic consideration in Maine because roughly 80 percent of Mainers heat their homes with oil or kerosene.

When people spend more money on oil to stay warm and on gasoline for their cars, they are left with less disposable income for other things.

The cost of fuel oil has experienced dramatic ups and downs in the past quarter-century.

The average annual price shot up to $1.20 a gallon in 1981, which is equal to $2.67 in today’s dollars, the newspaper reported.

Prices began to moderate after 1981 and fell to a low of 79 cents a gallon in 1998, the equivalent of 97 cents in today’s dollars.

Prices jumped sharply in 2000 but didn’t break $2 a gallon in real dollars until two years ago.