Winter Oil Heating Up; Prices Could Be Highest Ever

Sick of the heat?

Start worrying about the cold.

Heating oil prices are already at a record $2.15 a gallon – 55 cents above record figures this time last summer, according to state figures.

Today’s staggering prices easily exceed even the highest prices reached last winter, which was the most expensive cold season on record for home-heating oil.

“It’s a very crazy market,” said Tim Murphy, owner of Murphy Fuel, a Waltham heating oil company. “A lot of people are calling and asking for fixed prices (for the winter). But I can’t do it.”

The oil markets were in a tizzy yesterday amid concerns about refinery woes and possible shortages this winter.

The price of a barrel of crude oil hit a new record yesterday, at $62.31, all but ensuring already high gasoline prices will head higher this summer. The average price of a gallon of regular gas was $2.38 yesterday in Massachusetts, just a penny off a July 18 record.

Heating oil dealers, meanwhile, can’t predict what’s going to happen next – and, like Murphy, they don’t want to commit to long- term contracts that could end up costing them if there are more price spikes.

Michael Ferrante, president of the Massachusetts Oilheat Council, said it’s hard to predict what heating oil prices will be this winter – but today’s prices indicate it will be a costly winter.

The irony is that current heating oil inventories are in solid shape. New England had 8.6 million barrels of oil set aside late last month, compared with 6 million barrels last year, Ferrante said.

But some traders are concerned that demand for gasoline shows no sign of ebbing at a time when some refineries are experiencing production snags. When refineries get back to full capacity, they may have to turn their attention to gasoline production – and home- heating oil will suffer.

Terri Campbell, a portfolio manager specializing in energy at Eastern Bank, said prices could fall by as much as 20 percent if inventories are kept high.

But in a best-case scenario prices probably won’t even fall to last year’s record levels, she warned.