Residents plan for oil shortage

By Ellen Barry, Globe Staff, 8/5/2000

very year, as summer reaches its muggy height, the reality of the coming cold intrudes on New Englanders. This year, according to heating oil retailers, they're not taking any chances.

With New England's heating oil reserves running unusually low, record numbers of residential consumers are opting to lock in a price for heating fuel this year. By agreeing with dealers on a price this early in the season, consumers run the risk of losing if fuel prices fall; but they also guard against a repeat of February, when prices nearly tripled to $2 a gallon as residential consumers' stores ran low and winter's bitter cold dragged on.

''I think they're frightened,'' said Avril Sangermano of Sangermano Oil, who has been selling oil in Jaffrey, N.H., for 30 years. Last winter, ''people would come in and throw checks at us and say, `I hope you're happy. I couldn't buy groceries this week.' People took it personally.''

The outlook for winter oil prices became slightly darker Monday, when Energy Secretary Bill Richardson announced that the nation's heating oil stocks are running 19 percent below what they were last year. The shortfall is especially large along the East Coast, with an inventory of about 35 million barrels, 45 percent less than last year. Meanwhile, natural gas prices have more than doubled since last year, which could put further stress on oil inventories.

Oil dealers in the far corners of New England said they have seen anxiety about this winter's prices play out as customers choose fixed- prices, which protect them from market oscillation, or price caps, which guarantee prices will not rise above a certain amount. Dead River Co., which supplies about 85 million gallons of oil in Maine, New Hampshire, and Vermont, has seen fixed-price and price-capped business increase by 50 percent this year, and expects it to double from last year by the end of the summer, said Gerald Wallace, the company's manager of supply.

In Lewiston, Maine, Tim Heutz of Heutz Oil said he has lured 600 customers away from other companies simply by offering an all-winter fixed price. Oil prices currently range from $1.08 to $1.30 per gallon.

The dealers interviewed said the trend is being driven by the memory of last winter's final three weeks.

''It got terrible here in the Northeast Kingdom. It's one of the coldest regions in the United States and, if prices get too high, you conserve. And how do you do that? You freeze,'' said Vermont state Senator Julius Canns of Concord, who has sat on the state's Energy Committee for six years. ''We were pinched, and we'll be pinched again.''

Whether prices will rise to last year's jolting levels still depends on unpredictable factors such as OPEC crude oil production and the weather, specialists said. This year's inventory levels are not grounds for panic, said John Sullivan of the New England Fuel Institute, an association of 1,100 home heating oil distributors. Also, the pricing plans may help inventory problems by establishing a predictable demand, he said.

Another unknown quantity is the 2 million-barrel emergency heating oil reserve established for the Northeast last month by President Clinton. Envisioned as a guard against shortages like last winter's, the reserve would not likely affect prices in the long term, industry analysts said.

Residents of the Eastern Seaboard account for almost three-quarters of the nation's annual heating oil usage. And here, in the coldest reaches of the nation, some, such as Canns, say the real solution lies less in domestic measure than in cracking down on price-fixing by oil-rich Middle Eastern nations.

''We are in a boat by ourselves in Maine, New Hampshire, and Vermont. They don't feel it like we do,'' he said. ''We have two seasons: winter and the Fourth of July. You have to be conscious of it. September and October is almost too late.''

http://www.boston.com/dailyglobe2/218/metro/Residents_plan_for_oil_shortage+.shtml

-- Martin Thompson (mthom1927@aol.com), August 05, 2000