Heating oil price chilling NH By PAULA TRACY Union Leader Staff With oil reserves at their lowest in the region in more than a quarter-century and questions swirling about price and availability, New Hampshire residents are taking action as the winter heating season approaches. Woodstove dealers estimate that business is up more than 50 percent from last year. Home heating oil pre-buy programs are fully enrolled, with more people willing to pay up to $1.30 a gallon in advance.

Government officials are urging an early release of federal emergency fuel assistance funds to help build up regional oil reserves. Officials are also trying to remind consumers to conserve and become as fuel-efficient as possible. Take, for example, what consumers learned  and seemingly forgot  from the gas crisis of the 1970s. Since then, consumers have unloaded the fuel-efficient subcompacts and have bought 15-mile-a-gallon SUVs, trucks and minivans. Despite concerns 25 years ago about reliance on foreign oil, the Northeast has increased the crude oil it imports from 35 percent to 52 percent of consumption, said Merelise OConnor, deputy director of the Governors Office of Energy and Community Service. In the 1970s, gas availability was the issue, not price. Availability could be the issue again with oil this winter, which is the heating fuel for more than 51 percent of all New Hampshire residents. In January 1999, heating oil was 77 cents a gallon. By this past February, it was up to $1.85 a gallon. In March, it was $1.49, and now it is about $1.30. Dealers such as Johnson & Dix and Irving said pre-buy programs drew more interest than usual this year, with people willing to pay as much as $1.31 a gallon. But those who pre-buy are in the minority, and they are not enough to produce increases in oil reserves, which are at a 25-year low. "My analysis shows we are going to have a very tight market condition this winter," said Massood Samii, chairman of the international business department at New Hampshire College. A former senior economist for OPEC, he said there are several reasons for this, some historical. In 1980, crude oil was $40 a barrel. More recently, it has been $10 to $12 a barrel. The lower prices have discouraged domestic oil exploration and have stimulated demand. "We are not energy conscious anymore," said Samii. "This demand is increasing very fast, and supply is not increasing at all. "Now there are two questions: whether OPEC is willing to balance the market (by increasing production), and then are they able?" he said. Samii said that in the long term, consumers must be more energy conscious. "Obviously, we will do that when there is a shortage, but there will be a cost involved," he said. Jack Ruderman is assistant director of energy policy for the Governors Office of Energy and Community Service. He said that regionally, the public is reacting to the fact home heating oil prices shot up last winter and are not predicted to return to the prices of the 1990s. "There will be a stabilization, but no one knows," Ruderman said. "The industry is scrambling to balance having enough inventory to meet customer needs while keeping an eye on profits," OConnor said. "Right now, the economy is going great guns and we are using petroleum products as fast as they can be produced," she said. "The factors for winter heating fuel are going to be temperature and the growth rate of the economy. The available amount of crude oil worldwide will drive the price for home heating fuel."

Gov. Jeanne Shaheen last week asked President Clinton to release a portion of supplemental home heating assistance funds now rather than wait until October, when the heating season begins. Last year, more than $179 million was available for low-income New Englanders. Shaheen hopes early release of the funds could help encourage dealers to build up their inventories. "Many states are already seeing an increase in the number of applications for energy assistance in this heating season," she said in a news release.

Consumers are not just waiting for the cold weather and fuel bills, they are also looking to diversify their heating sources. Those in the woodstove business across the state have seen business jump more than 50 percent for this time of year. There is also a renewed interest in wood pellet stoves. Scott Brown, owner of Abundant Life in Chichester, said he thought he saw a big jump in business last year with the Y2K threat. But the concern for oil price and availability this coming winter has made for a very busy summer and fall. During the Labor Day weekend, more than 400 people came through the doors for a sale, and business was up 70 percent just for that annual sale. "People werent just looking, they were buying," said Brown. "This is way beyond expectations."

Even with wood $120 to $140 a cord and the average woodstove costing $1,200, people are flocking to woodstove dealers and to cordwood sales and delivery people. An average 1,800-square-foot home can be heated for about four cords of wood a winter, Brown said. At New England Wood Pellet Inc. in Jaffrey, operations manager Woody Keeney said the concern about heating oil has caused the company to increase production and expand capacity. The company collects hardwood sawdust, kiln dried, and places it in a machine that produces a compact wood pellet. Pellets retail for $3.20 a 40-pound bag and can be placed into a machine attached to a pellet stove, which regulates the amount of pellets to be used based on a thermostat reading, using a slight amount of electricity to regulate it. There has also been more interest in pellet stoves. Kate Fallon of Home and Hearth in Hampton Falls said she is seeing a renewed interest in pellet fuel "because of the dire predictions" for cost and availability of home heating fuel.

In one day, recently, her store sold 17 pellet stoves. "Weve been successful. Each year it continues to grow . . . biomass always will be there. And it makes it extremely affordable for people to be warm," Fallon said. "What seems interesting for them is (savings) from the cost of their fuel," she said, not necessarily an interest in renewable resources

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-- Martin Thompson (mthom1927@aol.com), September 08, 2000

Answers

"We are going to have a very tight market this winter."

At least, somebody in New Hampshire is wising up.

-- JackW (jpayne@webtv.nt), September 08, 2000.