February 12, 2025
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Chaotic world markets have dealers delaying next winter’s payment plans

PORTLAND – Sticker shock. That’s what homeowners who heat with oil are feeling as heating oil prices rise to more than $4.50 a gallon.

Heating oil prices are nearly double what they were last year at this time, and some oil dealers have delayed rolling out their payment plans for next winter as the chaotic world oil markets continue their wild ride.

Consumers – already on edge with rising gasoline and food prices – will probably be outraged when they calculate their oil bills for next winter, said Jamie Py, president of the Maine Oil Dealers Association.

“There’ll be sticker shock,” Py said. “Nobody knows what the price will do. It could go up or the bubble could burst and it could come crashing back down.”

The angst over heating oil prices is particularly acute in New England, where a higher proportion of people use oil as their primary heating source than any other region, ranging from more than 75 percent in Maine to about 40 percent in Massachusetts.

William Foss, 61, of Portland had his heating oil tank topped off Thursday with 115 gallons. At $4.52 a gallon, it cost him about $520. That’s the most he’s ever paid for heating oil, but he didn’t want to wait until fall for fear it’ll go even higher, to $5 or $6 a gallon.

“If prices still keep going up, they’re going to find people frozen to death next winter because they won’t have the money to buy oil,” said Foss.

While people elsewhere in the country are worried about air conditioning bills, people in the Northeast are already thinking ahead to next winter and reviewing different payment options – such as fixed-price, capped-price or prepayment plans – with oil companies.

Bangor-based Webber Energy Fuels, which operates across Maine and parts of New Hampshire, has been selling fixed-price programs at $4.70 to $4.80 a gallon for next winter, said President Mike Shea. Last year at this time, the price was $2.50 to $2.60.

In his 32 years in the business, Shea has watched commodity prices rise and fall.

“But it seems there’s only one direction in this market – up,” Shea said.

Fewer customers are signing up for payment plans, he said. Less than 20 percent of his customer base has signed up for fixed-price plans, down from about half two years ago.

In Vermont, many oil dealers have delayed setting up pre-purchase contracts because of concerns that prices could plummet, leaving them with expensive inventory they’d bought at the current high prices, said Matt Cota, executive director of the Vermont Fuel Dealers Association.

Many think prices will fall, but are well aware of predictions that they could keep rising.

“We’re talking about lots of money at stake,” Cota said. “If Goldman Sachs is right and oil goes even higher, $4.75 is a bargain.”

The residential price of heating oil rose 59 percent from the first quarter of 2007 to the same period this year, far outpacing the price of other heat sources, according to the Energy Information Administration. At the same time, natural gas and electricity prices both rose about 3 percent.

The federal agency projected this month that heating oil prices will average $3.67 a gallon in 2008, up from $2.72 a gallon last year. The projections are expected to be revised upward in June.

At today’s prices, homeowners will be shelling out hundreds of millions of dollars in cash for heating oil – with nothing extra to show for it.

In Maine, for example, if the more than 400,000 households that heat with oil pay an extra $1 per gallon for 1,000 gallons a year, that adds up to an extra $400 million spent on heating oil. If they pay $2 a gallon more, it totals $800 million.

Those kinds of numbers will hurt the economy, with less discretionary income leftover to spend in restaurants, stores and elsewhere.

The high price of oil is one reason why Maine retail sales fell 5 percent in March from a year earlier, said Catherine Reilly, Maine’s state economist. “In the near term, this will certainly put pressure on a lot of households,” she said.

While people can’t control the price of oil, they can take steps to cut their consumption. Judy Dorsey cut her oil use in half last year by making improvements to her 2,000-square-foot home in Gardiner.

After an energy audit of her house, which was built in 1850, Dorsey used a low-interest loan from the Maine State Housing Authority to have her walls and attic insulated, new windows installed, and cracks and holes filled in her foundation, attic and heat ducts.

Her heating oil consumption went from 750 gallons two years ago to 350 gallons last year, saving her hundreds of dollars in heating costs. She’ll save even more this year.

“I picked the right year to do it,” Dorsey said.

Associated Press writer Wilson Ring in Montpelier, Vt., contributed to this report.


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