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Sunday, April 3, 2011

Heating oil prices rise, and so does angst

Heating oil prices rise, and so does angst ; A 250-gallon heating oil delivery will set you back about $1,000. That same delivery just nine months ago would have been nearly $300 less.

Oil prices have spiked, and even though the price we pay now is actually 95 cents-per-gallon lower than it was in the last spike in the summer of 2008, that's cold comfort to those trying to keep their families warm.

Unrest in the Middle East is usually cited as the reason for the rise, but U.S. Rep. Jim Himes, D-4, said that he isn't buying that argument.

"Look, Yemen and Libya combined are not major players in the oil market -- Libya produces two percent, Yemen point-three percent," Himes said. "But something far more fundamental is going on -- China and India are becoming middle-class nations, and China in particular is aggressively buying commodities across the board, and that creates a structural pressure on commodity prices, including oil."

And Michael Warren, the director of research with Hart Energy, which publishes such magazines as Oil and Gas Investor, E&P (for "Exploration and Production") and Fuel, said that the rising demand for diesel fuel, which is chemically almost identical to heating oil, must share some of the blame.

"Demand for petroleum distillates is up worldwide, and we're seeing a pretty robust recovery in diesel demand, which is driving up heating oil, too," Warren said. "But meanwhile, demand for gasoline is falling because of ethanol and cars that get better fuel economy. The refineries are trying to shift as much of that production out of that barrel of oil to the lower distillates (diesel and heating oil). But a percentage of that production just has to go to gasoline, and that demand simply is not there."

Whatever the reasons, the price spike is causing its share of pain in homes across the region.

"When the prices go up, the number of gallons that we can get for heat are diminished," said Bill Bevacqua, assistant executive director of Action for Bridgeport Community Development Inc., the anti-poverty agency that serves Bridgeport, Easton, Trumbull, Stratford and Monroe. "It's gone up almost a dollar of gallon since November."

ABCD officials say that they can make exceptions to this in extreme hardship cases, but only by diverting funds from other programs, and from private contributions.

"We have several cases like that," said Charles Tisdale, ABCD's executive director.

"If an elderly person were to die of hyperthermia, people would ask: 'How could this happen?' So we have to find a way to do it."

Bevacqua said that the applications for energy assistance have been running about "six to seven percent" higher than a year ago.

"And the majority of those new people have been from the suburbs -- white, middle-class people," Tisdale said. "We even had 32 households from Easton qualify. Usually they're women. Their husbands have died, and their homes are being foreclosed upon."

ABCD gets its money for heating assistance from the federal Low Income Home Energy Assistance Program. For the fiscal year that ending in September 2010, just under $5 billion was allocated nationwide. Out of this, Connecticut received $96,941,803. ABCD gets about $1 million for oil assistance.

ABCD has more than 2,800 energy assistance clients this winter, about 6 percent more last winter.

To determine a client's oil allotment, ABCD takes a number of factors into account, including the age of the occupants, their income levels, and whether there are small children in the home.

For fiscal year 2011, the LIHEAP allotment hasn't been set as yet; Congress is considering cutting about $400 million from the program for the current fiscal year.

"That's very much in flux right now," Himes said of the LIHEAP funding situation. "The cuts that we make in the coming years can't be in investment -- like education -- nor should they be on the backs of our most vulnerable people. To ask the poorest of the poor to pony up and fix the deficit is a profoundly unfair thing to do."

One of ABCD's suburban clients is Jane Bennett, of Monroe. "It's been a tough couple of years -- my husband was laid off and I was injured at work," Bennett said. "I just know that we're not the only people up here having a hard time. The prices are crazy and people are out of work, and people just can't fill up the tank like they used to. And with the weather we've been having, you're always living in fear all of the time." She said that she didn't even know that ABCD existed until she began asking at Town Hall about who she could call for help. "ABCD has been just wonderful," she said. "It's very hard to ask for help if you've never had to."

Another ABCD fuel clients is Robert Thomas of Grove Street in Bridgeport, who in January was in the hospital getting a toe amputated.

"What really hurt was that I had a health issue and I'm out of work right now," Thomas said. "No money coming in. Out of work since January."

The people in the middle are the many independent oil delivery companies.

"I get fact-faxed two or three times a day on the prices -- two cents up, three cents up," said Beverly Sicsico, who owns Joe's Fuel Co. of Bridgeport.

"Believe me, it hasn't been going down. All I know is that I'm using a lot of paper and ink in my fax machine."

Not all oil companies offer an assortment of payment plans, such as locking in a price, capping a price and "budget" plans that spread out payments beyond the heating season. Some, such as Hoffman Fuel Co., only deliver on a cash-on-delivery basis.

"Locking in the price is a lot less popular than it was," said Dave Cohen of Standard Oil in Bridgeport. "In the summer of 2008, the price was going up and up, and everybody locked in. Then, the price went from $150 a barrel down to $30. It was extremely painful for a lot of people."

Cohen said that he doesn't recommend any particular billing strategy to his customers.

"I stopped making recommendations 10 years ago, because there's really no way to predict what's going to happen."

Meanwhile, there seems to be more interest in converting from oil to gas heat, at least for homeowners living along gas lines. "Right now, we're getting a lot of calls -- people have shown quite a bit of interest the last couple of weeks," said John Dobas, spokesman for the Southern Connecticut Gas Co. For the latest updates PRESS CTR + D or visit Stock Market news Today

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