Heating Oil Skyrockets

By KEVIN G. DeMARRAIS, STAFF WRITER

With summer coming and gasoline prices soaring, not too many homeowners are thinking about home heating oil prices.

So brace yourself. The average price of heating oil has nearly doubled in the last year.

At $4.60 a gallon it’s almost $2 a gallon more than a year ago, The Record’s North Jersey Marketbasket Survey shows. That’s the highest heating oil price ever recorded in the survey.

"This is the toughest market I’ve seen in 30 years," said Frank Olivo, vice president of Blue Ribbon Fuel Corp. in Nutley.

Conditions were tough in the early ’80s and in 2000, and there have been other price spikes, "but nothing like this," Olivo said. "Speculators seem to have the controls now."

Oil futures rose back above $131 a barrel on the New York Mercantile Exchange, double a year ago, on Wednesday as threats against Nigerian oil facilities apparently outweighed investor concerns about falling U.S. gasoline demand.

Gas-heat customers are also expected to feel the pinch, with the wholesale price closing at $11.92. On May 28, 2007, gas settled at $7.56 per 100 cubic feet.

Utilities are entitled to recoup rising commodity costs, but that requires action by the New Jersey Board of Public Utilities. With oil, the increases come with the next fill-up.

Fortunately for many homeowners, the heating season is over, so they can sit out the latest round of hikes and hope the price comes down by the fall. But homes that use oil to heat water and businesses that run equipment on oil are forced to fill their tanks and to pay unprecedented prices.

Customers used to be able to lock in prices in the summer, when they were historically lower. But few dealers offer those programs anymore after customers and dealers got hurt by price volatility, said Eric DeGesero, executive vice president of the Springfield- based Fuel Merchants Association of New Jersey. Some dealers will still allow customers to pre-buy their anticipated supply for the next year at a discount, but not too many homeowners are willing or able to lay out several thousand dollars on the speculation that prices may be higher next winter, Olivo said.

Retail prices reflect record-high wholesale prices. A year ago, wholesale heating oil closed at $1.94 a gallon on the New York Mercantile Exchange; on Wednesday, the price was nearly twice as high, $3.82.

"It’s absolutely crazy," said Gerri Baulch, a bookkeeper at SuperFuel in Paterson. With customer demand down, her company picks up a load at the terminal only when needed, Baulch said.

All this is putting a financial crunch on the companies, DeGesero said. Merchants have 10 to 12 days to pay wholesalers, while customers generally have 30 days to pay merchants.

"From Bergen County to Burlington County, in this high-price environment, dealers’ accounts receivable are enormous," DeGesero said.

"We try to add a finance charge when they’re late, but people are insulted," Baulch said. "We’re stuck behind a rock and a hard place."

***

E-mail: demarrais@northjersey.com

(c) 2008 Record, The; Bergen County, N.J.. Provided by ProQuest Information and Learning. All rights Reserved.