August 5, 2008

Home-Oil Dealers Feel the Heat: Surging Prices Put Customers on Edge

By David Pevear, The Sun, Lowell, Mass.

Aug. 5--LOWELL -- William West, owner of Rockingham Oil in Derry, N.H., which yesterday was charging $4.29 for a gallon of home heating oil, reminds his customers, "We only buy and deliver the product. We're not Exxon Mobil."

Small oil-delivery companies share their customers' budgetary pain. They hear the fear and grumbling from which Exxon Mobil and Chevron are well-insulated by record second-quarter profits.

"Oil-delivery companies are only the messengers," agreed Phil Lindsay, oil-program director for Mass. Energy Consumers Alliance, a nonprofit co-op that provides discount heating oil for 10,000 member households.

The message is not good. The winter ahead promises to be cold and expensive for the 40 percent of Massachusetts homeowners who heat their homes with oil.

Though, locally, the average price of home heating oil has fallen in recent days, the oil market's volatility continues to cause fear and unrest. Colonial Oil Co. of Chelmsford, for instance, yesterday was charging $4.29 per gallon for its cash customers, down from $4.79 last month. Prices at five local companies contacted yesterday ranged from $4.15 to $4.39 per gallon.

But despite the recent drop in prices, home heating oil still costs $2 more a gallon than it did 365 days ago.

How much will heating oil cost in October or November, when the first hint of winter's chill moves frantic homeowners to fill those 275-gallon tanks?

"I try to be optimistic ... but there's no way to

tell," said Kim McCrady, co-owner of Colonial Oil, a family-run business that has three oil trucks and two service trucks and was started by her grandfather in 1960.

Last year at this time, the average price of a gallon of home heating oil in Massachusetts was $2.54, according to the Mass. Department of Energy Resources.

A report released yesterday by the Donahue Institute at the University of Massachusetts suggests that the average household oil bill in Massachusetts next year could exceed $3,000. More than 100,000 Massachusetts households could have "severe difficulty" paying their oil-heat bills next winter, the report predicts.

"I just talked to a lady who ordered a couple of cords of firewood and is the hundredth person in line (to receive them)," said Glenn Shanks, 61, owner of Glenn Shanks Oil Co., a single 3,000-gallon-truck operation in Dracut. "All the other utilities will follow suit -- natural gas, electricity. It's all going up, you know."

Media accounts of the Donahue Institute report triggered the phones of the fuel-assistance program at Community Teamwork Inc., in Lowell. Susan Brittain, CTI's director of energy programs, said 11,250 applications were recently mailed to those who qualified for the program last winter. Thirty-two people walked into the CTI office ahead of the mail to urgently return their applications in person.

"(This winter will) be very scary all the way around," Brittain said. "We have a lot of concerns about how it will play out. There are so many elderly who already are making choices between medications, food and heat."

Those who deliver the oil are concerned about their credit limits being exhausted by customers needing more time to pay the high prices.

"I have to get payments within five days or I'll be out of business," Shanks said.

One local oil-company owner said that following the oil market to gauge the best time to buy from wholesalers is now a full-time job.

"You have to buy oil perfectly just to have a decent year," he said.

Among customers, anger has given way to fear, said McCrady.

"We're afraid for them," she said. "A lot are elderly or have children. It's tough on them. It's tough on us."

But in August's heat, Shanks still doesn't believe the full impact of $4 and up for a gallon of home heating oil has sunk in with many people.

"When they get that first real delivery at the end of September or October, and realize it is costing them $800 to $1,000 ... then it will sink in," he said.


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