Heating Oil Near Record High

www.ctnow.com February 27, 2003 By STACY WONG, Courant Staff Writer Heating oil prices in Connecticut this week climbed to an average $1.79 a gallon - the second-highest ever, according to a weekly survey conducted by state officials. This week's survey of 27 dealers across the state recorded prices as high as $2.05 a gallon. This week's average is second only to the $1.98 recorded in a survey Feb. 7, 2000, when frigid weather pushed prices as high as $2.25 a gallon. During that period, some home oil tanks ran dry, and consumer protection officials launched an investigation into price gouging by the state's heating oil dealers. Conditions aren't quite as bad this time around, industry executives said, but this year marks the first time in three years that weather-driven demand for natural gas has been so high that large commercial or industrial gas customers have been asked to temporarily switch to heating oil. And this higher demand for oil, coupled with continuing war jitters and a tight supply, has pushed prices charged by some dealers past the $2 a gallon mark again, they said. The large amounts of oil needed by institutions such as colleges and hospitals create upward pressure on heating oil prices, they said. "It's not like we're talking about picking up a home heating oil customer who wants 175 gallons; it's large customers," said Chris Herb, associate director of the Independent Connecticut Petroleum Association, a trade group of some 350 heating oil dealers. And in fact, St. Francis Hospital and Medical Center in Hartford - which usually heats with natural gas - has spent 25 to 30 days this year burning 120,000 gallons of heating oil, a volume the hospital has not seen since the 1990s, said facilities Vice President Bob Falaguerra. St. Joseph College for Women and the University of Hartford also have switched from gas to oil to heat some of their buildings this winter. Gas distributors such as Yankee Gas and Connecticut Natural Gas have asked some "interruptible" customers to use oil during parts of January and February, including this week. Those customers get a discounted rate on gas in exchange for agreeing to switch. Yankee Gas spokeswoman Sandy St. Pierre said that when cold weather pushes up consumption, there is not enough capacity in the gas lines to insure an adequate supply to residential customers who don't have the ability to switch between fuels. Falaguerra said St. Francis Hospital locks in an oil-price contract so it won't be hurt if it has to switch from gas more often. The hospital also burns No. 6 oil, which is cheaper than the No. 2 heating oil most homes use. St. Joseph College, however, will usually call up Kasden Fuel in East Hartford and buy No. 2 heating oil at the daily price, with a volume discount, said associate vice president Mike Jednak. While it's too late to lock in a contract with most oil dealers, customers can still get lower prices by buying in bulk, securing senior citizen discounts, using coupons or paying in cash on delivery. Buying clubs such as the Citizen's Oil Co-op in West Hartford also sell oil for less, although customers have to sign up for regular deliveries and pay a $10 membership fee if they don't register online. On Wednesday, the Co-op was selling oil for $1.45 a gallon, and the phones were busy. "I've just been inundated today with phones calls, I'm trying to call everybody back," said Rosie Stanko, who runs the Co-op with her husband, Mark Hutson. People who joined the Co-op earlier this year are paying $1.09 a gallon for oil, but, Stanko said, "$1.45 is still a whole lot better than $1.79." Herb, of the oil dealers' group, said it was hard to tell if prices would remain stable until the end of winter several weeks away. Factors such as a war against Iraq and a strike in oil-exporting Venezuela can't be predicted, he said. "You see the price bounce like a ping pong because of things beyond the control of Connecticut (heating oil) retailers," he said. "Prices are not set on Main Street, Connecticut, they are set on Wall Street."