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Jan 25, 2000 - 06:46 PM

Consumers Feel the Pinch of Higher Fuel Costs

By Denise Lavoie - The Associated Press

STAMFORD, Conn. (AP) - Alex Terentino feels like fuel suppliers have him over a barrel - twice over.

Terentino has seen the amount he pays for home heating oil go from 99 cents a gallon to $1.89 a gallon in a matter of weeks, while his bill for natural gas at his Stamford butcher shop has doubled in the last month.

"You've got no choice. You've got to pay," said Terentino, one of many consumers across the country complaining about the sudden and rapid rise in fuel costs.

With much of the Northeast gripped by frigid temperatures during the past week, usage of home heating oil was way up, leading to supply shortages in some areas.

In East Hartford, fire officials urged residents to lower their thermostats to conserve fuel after a main supplier, Motiva Enterprices LLC, said it expects to run out of oil by mid-week. Several residents in two town trailer parks went without heat for two days when their fuel wasn't resupplied in time.

With supply decreasing, home heating oil prices have responded by rising dramatically. In Connecticut, retail prices shot up at least 40 cents a gallon, to between $1.70 and close to $2 per gallon. In Massachusetts, the average retail price rose to $1.74 a gallon Monday, up 57 cents from a week ago and more than double what it was this time last year. And in New Hampshire, retail prices jumped 49 cents in six days, from $1.22 per gallon to $1.71.

Truckers are also feeling the pinch because of sharp increases in the costs of diesel fuel. In New York, the retail price of diesel fuel rose from a low of $1.349 per gallon to a high of $2.059 per gallon from Thursday to Monday, according to the New York State Motor Truck Association.

Even kerosene users were seeing steep price increases. At French's Kwick Stop, near Hegesvillle, West Virginia, kerosene prices have jumped from 99 cents a gallon a week ago to $1.69.

"People are shocked. I've been here 30 years and that's the highest I've seen it," said Donna French.

President Clinton, after being inundated with pleas for help from officials in several states, on Tuesday directed an emergency release of home heating assistance funds. The money was to go to Alaska and the Northeastern states "which have experienced the greatest hardship."

"These funds will help keep more American families safe and warm, and we'll get them out there just as quickly as we possibly can," Clinton said.

Industry analysts say the sudden price increases have been caused by several factors, including the recent cold snap, OPEC's decision to extend existing production cuts past an original March deadline and low petroleum supplies.

"If you look at global inventories, they are certainly at some of the lowest they've been at in many years," said George Beranek, an analyst with Petroleum Finance Co., a private consulting firm based in Washington, D.C.

"The low inventories are the result of the decisions made by OPEC, however," he said. "It has not reached the stage where suppliers are not getting what they need."

During the past year, as the Organization of the Petroleum Exporting Countries has reduced production, prices of oil and gas have skyrocketed.

Last year, winter was warmer than normal, and heating oil prices remained stable and in some cases, dropped slightly during the season. Wholesale prices for heating oil for delivery the following month traded on the New York Mercantile Exchange were hovering around 32 cents a gallon.

On Tuesday, heating oil for February delivery closed at 90.38 cents a gallon, off a high last week of 93.50 cents.

While some people accepted the supply-and-demand theory, others suggested there is some price-gouging going on. As a result, officials in several states are investigating the higher prices.

"We have clear indications that there are surcharges on bills, nondelivery of product, possible anti-competitive actions and lack of required notices of shortages - all of which may show violations of law," said Connecticut Attorney General Richard Blumenthal.

Thomas Prescott, of Johnny Prescott and Son Oil Co. in Concord, N.H., said any so-called shortage is one created to make money.

"There is no war in the Mideast, no refineries are down, there is no major explosion in the market," he said. "It is a normal winter in terms of degree days, and a cold snap of six to eight days should not force prices up one nickel."

-- snooze button (alarmclock_2000@yahoo.com), January 26, 2000

Answers

Seems like Thomas Prescott is only 50% wrong. Of course, that figure could increase...

-- Gia (laureltree7@hotmail.com), January 26, 2000.

Mester Prescott needs to read the trades more.

C

-- Chuck, a night driver (rienzoo@en.com), January 26, 2000.

This article is big time scary because it illustrates how little attention most people pay to what's going on around them. Hey, if a dealer doesn't even know what's going on in his business how can anyone expect the rest of the population to know?

If they don't know, how do they decide what to do?-----they listen to .gov.

More and more like eighty four........1984, that is. Orwell was right, his timing was just poor. Let's see, this week we're at war with....whom? And who is our ally?

-- rocky (rknolls@no.spam), January 26, 2000.

Uh... Don't get me wrong, I think it's mighty neighborly of Mr. 'c' to send us polar bears money for heating oil & NG, and I sure don't wanna look a gift horse in the mouth, but .....

What good is the funding going to do when the suppliers RUN OUT???

Just wonderin'

-- Arewyn (artemis31@email.msn.com), January 26, 2000.