News - August 24, 2000

Heating oil supplies are lowest in 24 years From Staff and Wire Reports

Consumers could pay more for home heating oil after oil prices surged to their highest levels since the Gulf War following an industry report showing that U.S. crude-oil supplies have sunk to a 24-year low.

Charlie Ballard, a manager at Fred Fuller Oil Co., said that wasnt good news as he already expected people will face a higher home heating oil bill this winter. "It looks like in the end, people will be paying more: 20 to 25 percent more this year over last year," said Ballard, who manages the Hudson operation. Ballard said that was only a guess since the oil market is built on speculation.

Prices for home heating oil now are about 40 cents a gallon higher than this same time last year. While he doesnt expect oil prices to hit almost $2 a gallon like they did last winter, he thinks peoples overall heating bills will be higher this winter. Debra Schacter, director of the governors energy office, said it was too early to say whether yesterdays developments would lead to higher winter oil prices. "I think what we have now is that were seeing low inventories and the potential for a winter of price volatility and supply uncertainty," she said last night. Ballard offered some advice: "Buy now, absolutely, and dont use as much," he said. Schacter said people can take conservation steps, such as making sure windows are sealed tight and caulked and water heaters are wrapped.

She also hopes federal fuel assistance money will be easily available to help cash-strapped familes heat their homes. At the close of trading on the New York Mercantile Exchange, crude oil futures for October delivery were up 83 cents, or 2.7 percent, to $32.05 a barrel, near the highs reached during the 1991 Gulf War. In a report from the American Petroleum Institute released late Tuesday, U.S. crude oil stocks fell 7.774 million barrels to 279.71 million barrels for the week ended last Friday, the lowest level reached since March 1976, when stocks fell to 265.8 million. President Bill Clinton, on a visit to Nigeria, said yesterday he would the oil-rich country and other members of the Organization of Petroleum Exporting Countries, the cartel that plays a dominant role in setting prices, to lower their prices. Soaring oil prices helped raise the U.S. trade deficit to a record $30.6 billion in June. Imports of crude oil rose $1.6 billion to a record $8 billion.

Clinton said OPEC countries would be "much better off with a price thats below where it is now, but one that can be sustained." Clinton said the price for crude should be in the low- to-mid-20s "and I will clearly discuss it with (Nigerian) President Obasanjo and with others in the weeks ahead." Secretary of State Madeleine Albright said the Presidents two-day visit to Nigeria was designed mostly to "emphasize and underline the positive aspects" of Obasanjos 15-month-old rule.

She said reports that Nigerian officials were adopting Islamic Shariah law to segregate schools, cane drinkers and amputate the hands of thieves were exaggerated. Albright said the strict system was being installed only in parts of Nigeria. Albright said 20 U.S. soldiers were due to arrive soon in Nigeria to begin training a Nigerian battalion to serve under a U.N. command in Sierra Leone. She described the situation there as "a horror" and said it was important to regional forces there to stabilize the country.

On the oil front, United Arab Emirates Oil Minister Obaid bin Saif al-Nasseri said earlier this week that $25 a barrel was a reasonable price for oil and it is important for both consuming and producing countries to agree on that. The European Union said Tuesday that it has asked OPEC to increase oil production to bring down prices. EU officials said the 15-nation bloc would like to see the price of crude oil around $25 a barrel. World oil prices have soared above $30 this month, leading to an outcry from consuming countries. OPEC, of which the Emirates is a member, has been divided over the need for more oil.

http://www2.theunionleader.com/articles/articles_show.html?article=9117

-- Martin Thompson (mthom1927@aol.com), August 24, 2000