As the cost of heating oil soars, users shiver and cross their fingers
NORTH BROOKFIELD, Mass. — When David Harris built his 2,000-square-foot hilltop home nine years ago, he wanted to put in natural gas, but the utility wouldn’t run a line to his house. Like many people here, he was stuck using heating oil.
Harris added a wood stove to help cut costs and now uses only about one-third of the oil the house would otherwise need. But that did not stop a deliveryman for Crowley Fuel from handing him a $471.21 bill earlier this month for a refill that should get him to April.
“You just cross your fingers and hope that it doesn’t get too much worse,” Harris said.
Actually, it probably will — for him and the residents of the roughly 8 million other U.S. homes that use heating oil, mostly in a band from Maine to Pennsylvania.
While natural gas prices have plummeted to 10-year lows, heating oil prices have been steadily rising for years and are expected to reach record levels this winter, precipitated by higher costs for crude oil and the shutdown of several crucial refineries in the Northeast and in Europe. The Energy Department projects a price of $3.79 a gallon over the next few months, more than a dollar above the winter average for the last five years. Analysts do not expect much relief in the longer term, either, because global oil prices are expected to stay high amid political instability in the Middle East and rising demand from developing countries.
With electricity prices also down, utilities are trumpeting that bills will drop this season for customers using gas and electric heat.
“The people who have been unable to switch off of heating oil will be increasingly penalized in the coming years,” said Jay Hakes, a former administrator of the Energy Information Administration and now the director of the Jimmy Carter Library and Museum. “There’s going to be a continuing incentive to get off heating oil, because every day the headlines and experts say that over the foreseeable future, we will have natural gas at attractive prices.”
Nationwide, the average household using oil spent $2,298 on heat last year, compared with $724 spent by gas users and $957 spent by electricity users, according to the Energy Department.
This year, heating oil users are expected to spend 3.7 percent more than last year, while natural gas customers are expected to spend 7.3 percent less and electricity users will spend 2.4 percent less, according to the department.
Many oil users — living in places like Alaska, Maine and even affluent parts of Manhattan — do not have the option to switch to natural gas. Some are simply too far from a pipeline. For others, converting to natural gas is unaffordable, with costs that can run to tens of thousands of dollars for each home. As a result, they are trapped in a cycle of spending more and more for heat while those who use natural gas and electricity are generally spending less and less.
That dynamic is at work in households across the economic spectrum, but the cost gap looms as a crisis for the poor, experts warn, since the federal government has cut financing for energy assistance programs.
“We’re concerned about a public health problem if there isn’t additional money found,” said Mark Wolfe, executive director of the National Energy Assistance Directors’ Association. “We’ve really never been in a situation before where we’re going into the winter with very high prices” for heating oil, he said, adding that the highest prices tended to come near the middle or end of the season.
Heating oil could grow more scarce in the Northeast this winter, the Energy Department warned last month. Companies have been closing refineries that produce heating oil because of declining profit margins. Sunoco and ConocoPhillips recently announced the idling of two major refineries in Pennsylvania, and a third refinery owned by Sunoco may close next summer.
Ultimately, heating oil faces a grim future, said Bob LaFlamme, who took over Crowley Fuel in North Brookfield from his wife’s family 23 years ago.
“People are looking for alternatives,” he said, adding, “Even one of my own employees switched over, so that’s telling you something.”