Maine oil crisis looming State faces chilly winter, uncertain of fuel stocks Source: Bangor Daily News Bangor, ME Publication date: 2000-08-03

BANGOR - The volatile heating oil industry is being affected by so many factors that some federal analysts and local suppliers are saying that this winter Maine and New England could experience a "mini crisis" similar to the one that hit the region earlier this year. Whether the area will have an adequate supply of heating oil is a guess for industry watchers. They cite that the price people will pay to heat their homes will depend on several things - the weather, OPEC's crude oil imports, oil refineries and their production and stockpile levels.

For homeowners wondering whether to buy their fuel in advance, that decision is becoming a gamble - lock in a price now or take a chance on the price going down in a few months.

The federal analysts and local suppliers cannot agree on the severity of the expected "mini crisis." Most say there's no reason to panic. "We're not saying there's going to be a crisis," said Jonathan Cogan, an energy information specialist at Energy Information Administration, an independent agency within the U.S. Department of Energy. "We are very concerned."

The American Petroleum Institute, in its weekly report on crude oil inventories,said Tuesday that U.S. supplies have plummeted by 9 million barrels in the last week, to 284 million from 293 million the previous week. Crude oil is used to make heating oil and gasoline.

That report follows U.S. Energy Secretary Bill Richardson's statement Monday that heating oil supplies in New England are lower now than a year ago. Along the East Coast, New England inventories are 45 percent lower - at about 35 million barrels - and U.S. inventories are 19 percent lower that they were last year.

Why New England has more of a shortfall than the rest of the country, especially when 50 percent of the homes use heating oil compared with 9 percent nationally, could not be answered.

"I don't know why New England, on a percentage basis, would be lower," Cogan said.

At API, the shortage of crude oil and heating oil is not that much of a concern, said spokesman Bill Bush.

"What we've been saying is that we're a really long way away from heating oil season," Bush said. "We don't think that number at this particular time is very significant."

API, which represents natural gas and heating oil companies, expects refineries to increase heating oil production after the peak driving season is over, which is Labor Day weekend. At that time, production will be based on what they expect will be needed this winter.

"The refineries will make as much heating oil as they can sell," Bush said.

EIA, too, is looking at the 9 million barrel crude oil shortfall as a ++positive development." Cogan said crude oil stockpiles may be down because refineries aren't buying crude now, opting instead to wait for Saudi Arabia to increase production by 500,000 barrels a day and prices to fall because of that.

"There's no incentive to buy now if they think prices will go down later," Cogan said. "You can't read too much into weekly supply numbers."

If New England experiences a cold winter, though, the lack of heating oil production now could hurt supplies in the season's early months.

"We'll be at fairly low levels going in to the heating season so it doesn't bode well if we have a cold winter," Cogan said. "If we have a colder winter, we'll have higher prices. If we have a warmer winter, we'll have lower prices. What we can't predict is things such as that.

-- (here_we@go.again), August 04, 2000

Answers

The DUH of the DAY:

We'll be at fairly low levels going in to the heating season so it doesn't bode well if we have a cold winter," Cogan said. "If we have a colder winter, we'll have higher prices. If we have a warmer winter, we'll have lower prices. What we can't predict is things such as that.

-- cpr (buytexas@swbell.net), August 04, 2000.

The Duh of the Month

-- Duh of the Month (Duh@the.month), August 11, 2000.