Oil price highest in two decades An increase in prices in New York on Thursday causes Maine terminals to raise their prices overnight.

Source: Portland Press Herald Publication date: Feb 05, 2000

Heating oil and kerosene prices were heading up Friday in southern Maine as oil dealers responded to abrupt jumps in the cost of their supplies.

The increases sent retail prices to their highest levels in at least 20 years, hitting the $1.70 range in Portland.

"I can't believe the prices," said Dan Perkins of Portland, who ordered 100 gallons of oil -- at $1.67 a gallon -- from Dead River Co. on Friday. Perkins said the price has risen roughly 50 cents a gallon since his last order about a month ago.

Terminals in Portland Harbor raised their wholesale prices overnight, prompted by a spike Thursday in the wholesale cost of oil from New York. Inventories were said to be adequate but tight.

Those New York prices, which help set the price that customers ultimately pay, were at record levels Friday, in the $1.75 range -- more than what many dealers in Maine were charging retail. That suggests retail prices will continue to move up -- at least temporarily -- over the next few days.

At Union Oil Co. in South Portland, managers learned early in the day that the wholesale price of oil at their supply terminals had risen overnight by 10 cents.

"I'm passing on that 10-cent increase," said Mike Francoeur, chief financial officer at Union Oil.

On Thursday, Union Oil's cash price was $1.60. Friday it went to $1.70.

At Dead River Co., heating oil moved from $1.60 on Thursday to $1.67 on Friday. Kerosene went up from $2 to $2.07.

"I don't see any relief," said Gerald Wallace, Dead River's supply manager. "I've never seen it like this in my 35 years in the business."

Kerosene remained in short supply Friday at terminals in Portland and Newington, N.H., according to John Peters, executive vice president of Downeast Energy.

"There is enough at the moment," Peters said. "It's not as critical as it was a week ago."

Downeast was selling kerosene in Portland on Friday for $1.99. The price was set to rise to $2.08 today. Perkins, the Portland resident who was shocked by his oil bill on Friday, said he's already taken some steps to hold down heating costs in the house he rents on Washington Avenue with his brother and a roommate.

The trio moved their television room up from the cold basement to the living room to save on heating costs and the house's thermostat is rarely set above 60 degrees. Perkins said he prefers to keep the house cool -- he's used to cold temperatures because he works outside for Blue Rock Industries. "But if someone leaves the door open, I'm all over them," Perkins said.

The oil-price rise is especially hard on the poor. Even those who get help with their fuel bills have seen the money disappearing rapidly with the higher prices.

Victoria Doughty, the social services director for PROP in Portland, said the Low Income Home Energy Assistance Program provides an average of $255 for a family of four in an apartment and an average of $305 for a family in a house -- for the full season. At today's prices, that will buy less than 180 gallons of fuel -- not even a full tank in most houses.

The average house uses 800 to 1,000 gallons of heating oil a year.

Doughty said the program has processed nearly 2,600 applications this year, compared with 3,200 for all of the last heating season, and the program still has three months to go.

"Since the fuel prices have gone up, we're getting between six and 10 calls a day from people who have never applied before," she said.

Industry analysts who track oil prices were stunned at how volatile the market has been this week. The New York price for heating oil has risen 69 cents since Tuesday.

Typically, wholesale prices in New York Harbor move along with commodity prices, on contracts for oil to be delivered in the near future. Now the harbor prices are well above the futures prices, reflecting tight supplies. Simply put, sellers who have oil for delivery now are calling the shots, experts say.

"They are trading at surreal levels," said Tom Kloza, publisher of Oil Price Information Service in New Jersey. "We're in uncharted territory here."

Kloza predicted that the prices customers pay will rise next week as this new, more expensive oil arrives at local terminals.

"There's still some catching up to do on retail," he said.

The current run-up in oil prices provides a stark contrast to conditions last year. In 1999, the statewide average oil price was 74 cents a gallon, the lowest in at least two decades.

At $1.70, the current cash prices in Portland easily surpass the average annual prices in 1991 and 1982, according to the State Planning Office. Inflation-adjusted for today's dollars, the average price in 1991 was $1.04; it was $1.20 in 1982.

Kloza said it's possible that the supply situation will improve next week. Oil barges that had been tied up in port due to high seas and wind were making deliveries, he said. That could start to bring down prices as supply catches up with demand.

"It's just difficult to say when we're in the last inning," he said.

"I don't see any relief. I've never seen it like this in my 35 years in the business." Gerald Wallace, supply manager for Dead River Co.

Publication date: Feb 05, 2000 ) 2000, NewsReal, Inc

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-- Carl Jenkins (Somewherepress@aol.com), February 06, 2000

Answers

I was talking with a freind today at his business near the NY/PA border. His station has diesel for $2.19/gallon and he was given a notice that his next delivery will be at $2.38. Home heating oil is approaching $2.00 locally and kerosene is $2.01.

Fully one fourth of all local residents are on a fixed income, and we are certain that the "heat or eat" point is approaching for some. At church yesterday we discussed the same issue, vis a vis using preps stored by the church for local food assistance. It looks like that time is approaching, just without the hordes of out of towners being the ones needing the help.

WW

-- Wildweasel (vtmldm@epix.net), February 07, 2000.