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Huge Oil Price Increases Imminent for Truckers, Airlines, and Homeowners

Source: PRNewswire

LAKEWOOD, N.J., Jan. 23 /PRNewswire/ -- Oil price increases, that in some cases surpass the hikes seen during the Persian Gulf War, are about to stun homeowners, airlines, and trucking companies, according to OPIS Energy Group. The New Jersey based publishing company reports that many retailers have yet to pass on recent wholesale price hikes of 40-60cts gal that have hit some markets in the wake of record cold temperatures.

Wholesale prices for many fuels reached all time record levels in the northeast on Friday, as oil suppliers and marketers scrambled to find oil to deliver to end-users in the region. Wholesale prices for heating oil at supply points in New England, for example, soared to over $1.25 gal, an increase of more than 50cts gal in less than ten days. These prices are four times the value they fetched in markets exactly one year ago.

Homeowners and commercial buyers who paid well under $1.00 gal for their heating oil just a month ago now face retail costs of $1.50- $1.75 gal. Heating oil retailers typically have little inventory and must immediately pass wholesale increases on to their customers.

The surge isn't limited to heating oil, however. Diesel fuel prices have soared to similar wholesale price levels as suppliers in Winter-ravaged states have opted to put fuel normally sold for over- the-road purposes into the heating oil supply pool. Diesel truckstops, service stations, and fleet centers in the Northeast saw increases of 25-40cts gal over a three day period this week. Even areas far removed from the Northeast saw stiff price hikes of 5- 15cts gal during the week as the oil industry struggled to keep the distribution system moving smoothly in the face of brisk demand and low stocks.

Stiff retail diesel prices will rear their heads before the month is over. OPIS' Retail Pricing Director Fred Rozell cited a nationwide retail average of $1.37 gal for diesel, up less than 1cts gal since January 1. If prices merely catch up with the wholesale trends, some markets could face increases of well over 25cts gal.

In Connecticut and Massachusetts, for example, the average price for diesel stood at $1.39 gal on January 21. Retailers replacing those gallons faced a cost of over $1.60 gal heading into the weekend.

Jet fuel cost increases were even more drastic. Airlines which could buy fuel for under 75cts gal just a month ago saw aviation fuel costs soar to $1.30-$1.35 gal by Friday at major airports in New York, Newark, Boston, and Philadelphia. Like diesel fuel and heating oil, these costs are about four times higher than what was commonplace a year ago.

What's ahead? OPIS Publisher Tom Kloza warned that the supply shortfall in the Northeast might not ease until February. "Refiners and traders are racing to get fuel to the market, but the system may not be comfortable for two weeks or more. Until then, look for price spikes and tremendous volatility," Kloza added.

With more wild price moves expected, OPIS has extended a free e- mail bulletin service that updates suppliers, marketers, and end- users on price swings nationwide. Sign up for free OPIS PRICE WATCH ALERTS at http://www.opisnet.com.

OPIS Energy Group analyzes oil prices and trends for the petroleum and transportation industries throughout North America. The company tracks wholesale and retail prices for gasoline and diesel fuel, crude oil, refined products, feedstocks, and LP-Gas. This year alone, more than 100 billion gallons of fuel will be purchased pegged to the OPIS Price Index. SOURCE OPIS Energy Group

-- snooze button (alarmclock_2000@yahoo.com), January 24, 2000

Answers

Snooze,

Great post! Thanks!

Hold onto your preps, folks. Higher oil prices will mean higher prices for all services and goods that have to be moved from point "A" to point "B."

Where do your groceries come from?

Those sacks of rice and beans you bought last year; dig out the receipt. Check the price for what ya paid for 'em against what you'd have to pay for 'em in February; you'll be glad you bought when ya did.

Peace and Love to All Y'all,

Don

-- Shimoda (enlighten@me.com), January 24, 2000.

Thanks Snooze button, that was a valuable post.

-- JoseMiami (caris@prodigy.net), January 24, 2000.

snooze, just got my eyes open wide enough to see this post! thanks for the infor! you guys were on this early and right again! just sent out to tb2000 from the drudge report. lookes like i better get a cup of coffee......when i "snooze" i lose, lol.

-- mutter (murmur@ya.com), January 24, 2000.

Yes, we have no inflation...

-- Mara (MaraWayne@aol.com), January 24, 2000.