Northeast braces for record home heating oil increases

 New Englanders struggling this summer to pay gas prices topping $4 a gallon should brace for more bad news home heating oil costs next winter are expected to hit record highs.

One retail heating oil dealer says she expects a typical household delivery that cost $500 last winter will climb to at least $850 this winter.

"It's going to be staggering," said Northboro Oil Co. owner Sandra Farrell in a telephone interview with The Associated Press. "It's going to be a real problem going into this winter for everyone unless something changes."

Farrell, whose family has owned and operated the Northborough, Mass., business since 1953, said some dealers are talking about prices in the $4.89 per gallon range for the coming winter, about $2 more per gallon than last winter. An average household usually needs four deliveries from December to March, she said.

Record-high crude oil prices have sent gasoline costs soaring this year. The National Energy Assistance Directors' Association, which represents state-run low income energy assistance programs, recently predicted that home heating oil costs will hit record levels this winter.

The group said the national average cost to heat a home with oil this winter will be $2,593, up from $1,962 last winter. Families in cold-weather Northeast states will be hit even harder.

About 40 percent of Massachusetts homes use oil heat. More than 963,000 households in the state use home heating oil which is delivered by more than 800 distributors, many of them small businesses. In Maine, one of the nation's coldest states, four out of five households heat with oil.

Farrell told a Senate panel she expects high heating oil costs will force many cash-strapped families to make tough choices between eating and staying warm.

"It is very tough looking into the eyes of these customers when they ask me what I think they should do," Farrell said in testimony Wednesday at a Senate Small Business and Entrepreneurship Committee hearing. "I don't know what to tell them. For the first time I think some of my customers are going to have to choose between main essentials like groceries, gasoline, warm clothes and heating oil just to pay their bills."

Sen. John Kerry, D-Mass., who heads the Small Business panel, warned of an impending crisis in the Northeast, which is more reliant on oil heat than other regions.

"It is reality not rhetoric that price spikes will force people to decide whether to feed their families or heat their homes," Kerry said at the hearing.

Maine Sen. Olympia Snowe, the panel's ranking Republican member, said high oil prices are a matter of life and death. She said parts of Maine could literally "become uninhabitable" for many this winter.

"When people can't afford the cost of home heating oil, they simply freeze," Snowe said. "Consumers and small businesses are being stretched to the limit and beyond, but nowhere is the ensuing calamity looming larger than in New England where just getting through this winter is fast-becoming our No. 1 priority."

To ease the oil heating price crunch, Kerry and Snowe are pushing legislation to give businesses hurt by high heating oil costs access to credit through Small Business Administration disaster loan programs. They also want to help more families by expanding government home heating aid through the Low Income Home Energy Assistance Program. Millions of poor and elderly people on fixed incomes rely on heating assistance to help pay their bills.

Snowe has a bill, co-sponsored by Kerry, to mandate that heating oil from the Northeast Home Heating Oil Reserve should be released if home heating oil tops $4 per gallon this winter.

Farrell said the line between running a business and a social services agency can sometimes seem to blur when she's dealing with families who can't afford to heat their homes.

"It is painful to have to tell someone when the temperature outside is below zero that we cannot deliver to them because they have no money," she said in testimony. "I have made so many exceptions, but if I make too many more, the business won't survive."

Small oil dealers are feeling squeezed because many customers can't pay, or else they get way behind in what they owe. The credit crunch means dealers can't pay their suppliers, who want their money within 10 days, Farrell said.

"We're finding the cash coming in very slowly," Farrell said.

On the Net:

Low Income Home Energy Assistance Program: www.acf.hhs.gov/programs/liheap