Heating Home With Oil Expected to Jump: Warmer Weather may Lower need, However
By Randy Trick
WASHINGTON, Sept. 12, 2002–The Energy Department predicts the cost of heating the average home with heating oil will increase 42 percent this winter, which has area residents and oil distributors nervous.
The department’s forecast, the first so far for the coming winter, predicts the national price of heating oil will rise 15 to 24 percent over last year. The report also forecasts that demand for heating oil will be up by about 18 percent.
The report released last week by the Energy Information Administration (EIA) based its predictions solely on factors affecting the price of crude oil, such as volatility in the Middle East and domestic stockpiles that affect the level of supply. The report considers past oil usage in calculating demand, but does not take into account the predicted severity of the winter.
“We don’t try to forecast the weather. We assume it will be a normal winter,” said Jonathan Cogan, an EIA energy information specialist.
The EIA is the Energy Department’s primary source of comprehensive energy information and statistics. Cogan said the agency’s forecasts are updated every month and do a good job forecasting what actual prices will be. Prices in the Northeast rarely vary from national prices because the region is the largest consumer of heating oil, he said.
“We’re pretty good at predicting what’s going to happen,” Cogan said. If anything, he added, “Massachusetts prices may be slightly lower.”
But that’s little consolation to area residents still facing a hefty increase.
Alice Kluk paid $1,313 to heat her home in Lawrence during the bitter winter of 2000-2001.
Last year, which was much warmer, her bill dropped to $911. The prospect of quadruple-digit costs to stay warm this year is not comforting.
Her house, a refashioned farmhouse that has been in her family for about 90 years has one thermostat, so the entire house is always heated. Based on the Energy Department’s forecast, Kluk is looking at a bill near $1,300.
“I’ll get by,” she said. The 81-year-old widow of 19 years said she has the money to pay higher rates but was not enthusiastic about paying.
“I know everything else is going up – gas, electricity. I’m sure oil will go up too, especially with the situation the world’s in,” Kluk said.
Companies that sell heating oil are not enthusiastic about the predictions either, although few expressed surprise.
“We keep a close eye on prices,” said Lee Marchand III, President of Colonial Oil, in Lowell.
Marchand said he expects prices to be 10 to 15 percent higher than last year’s, and figures prices will stay below $1.19 a gallon.
Last year, with winter temperatures warmer than normal, businesses like Marchand’s were hurt by low demand and sales were off, he said. “We’re still trying to catch up from last year,” Marchand said.
“We like it when heating oil prices go down, because competition decreases, and it saves customers money,” he said.
When prices increase, he said, heating oil distributors in New England “start climbing all over each other,” hurting businesses and driving up prices further for residential customers. “It’s the little guy that gets hurt.”
Colonial Oil, serving customers within a 20-mile radius of Lowell, is admittedly a “little guy,” according to Marchand.
Besides the availability of oil, weather factors affecting demand contribute to overall heating costs.
Yesterday the National Oceanic & Atmospheric Administration released its climate predictions for the coming fall and winter, saying Northeasterners can expect warmer than usual conditions.
“Expect something much like last year,” said Jim Laver, director of the climate prediction center at the national weather office.
A moderate El Nino system in the Pacific Ocean will make the northern part of the nation warmer than usual, while the southern tier will be wetter than usual, the agency said.
“By no means do we imply there won’t be winter,” Laver said. “It’s twice as likely there will be East Coast storms,” but they will be warmer.
To businesses whose bottom line relies on heating oil demand, the winter outlook is not great news.
Published in The Lawrence Eagle Tribune, in Massachusetts.
