Crude Oil Prices Decline, Making Dealers Hopeful

<a href=www.newsday.com>NewsDay.com By Randi F. Marshall STAFF WRITER April 3, 2003

As crude oil prices continued to fall yesterday on hopes that the war in Iraq may be near an end, area heating oil dealers, gasoline retailers and consumers were hoping they would reap the benefits.

Already, home heating oil retail prices have fallen from peak levels of the past three months. While gasoline prices have remained relatively stable recently, experts say they, too, will eventually respond to the crude oil declines.

To be sure, the usual seasonal factors play a role in the drop. "Everybody's consumption is cutting down," said Thomas Ortmuller, owner of Franklin Petroleum in Oceanside. "The prices are going to be less and less as we get into the summer months. It's just basic economics."

Turmoil in Iraq, Venezuela and Nigeria added to pricing pressure on oil during the winter. "Everything that could go wrong went wrong," said Kevin Rooney, chief executive of the Oil Heat Institute of Long Island.

But now, some experts say those troubles are resolving themselves just as people need less fuel. Said Rooney: "It's like, 'Boy, why couldn't this have happened back in January?' We all would have saved a lot of money."

Crude oil for May fell $1.22 to $28.56 a barrel on the New York Mercantile Exchange yesterday. Prices have dropped by more than $10 from their peak levels of late February and early March.

Heating oil wholesale prices dropped by 18 cents since the beginning of March, and are likely to keep falling, according to Rooney. Retail prices fell by roughly 11 cents in the last two weeks, he added.

Hawkins Cove Oil Supply Corp. in Glen Cove, for example, is now charging roughly $1.709 per gallon, compared with nearly $1.80 at its peak in March, according to owner George Hawkins.

By contrast, gasoline prices remain near their highs at $1.779 per gallon for regular self-serve gasoline on Long Island, and $1.829 per gallon of regular, self-serve in Queens.

As the months grow warmer, more home heating oil dealers buy most of their oil on an as-needed basis rather than through long-term contracts at fixed cost, so prices fluctuate along with the worldwide market. Franklin Petroleum, Hawkins Cove and other small, family-owned businesses purchase much of their supply daily, from large firms such as ExxonMobil and ConocoPhilips.