10.3.2000 00:05 R.I. powerless to combat cost of heating oil, governor says But state officials say they will push for additional heating assistance for the poor, review emergency plans and monitor oil supplies in Rhode Island.

By BOB WYSS Journal Staff Writer

PROVIDENCE -- With the greatest fears in a quarter-century that Rhode Islanders could run out of heating oil this winter, Governor Almond yesterday ruled out a range of options for increasing the state's oil supplies.

Almond placed the burden on individuals.

"I urge Rhode Islanders to conserve and to do what they can about weatherization" by insulating their homes, Almond said.

The governor said a small state like Rhode Island cannot influence heating oil prices.

The average price of a gallon of heating oil in Rhode Island was $1.499 for the second week, the State Energy Office reported yesterday. That price is 50 percent higher here than a year ago.

Expectations that demand will increase yesterday drove the price of a barrel of crude oil in New York up more than 4 percent.

Almond spoke at a State House news conference after a mid-morning meeting with Lt. Gov. Charles J. Fogarty and state officials from the National Guard, energy and environmental agencies.

Almond and Fogarty said they will press federal officials for more heating assistance to the poor. They said the state today will begin dusting off its emergency plans to deal with a crisis this winter, and will begin monitoring how much oil is stored in Rhode Island.

"Unbelievable," said Victor Allinello, a spokesman for the Rhode Island Oil Heat Institute, which represents heating oil companies. "It looks like the Oil Heat Institute will have to go back to the drawing boards. I don't think that we can sit back and say that there is nothing we can do."

Concerns are high this winter because stocks of heating oil in New England are 50 percent below normal levels. The amount of storage available has been reduced from what it was a year ago. At anytime, Rhode Island has a four- to seven-day supply of oil in its six port terminals, Allinello said.

If the weather becomes so poor that barges cannot get to Narragansett Bay from supply terminals in New York Harbor, Rhode Island could run out of oil, Almond acknowledged.

It nearly happened last February.

Oil dealers had proposed that the Almond administration offer tax incentives to wholesale oil companies so that they would open one or both of the terminals that have shut down in the last year. The oil dealers and state energy officials estimated that Providence has about 100 million gallons of storage, down from about 120 million gallons at this time last year.

Almond's staff had been considering another alternative. Prices have been so high recently that oil companies have reduced inventories to reduce their losses in case prices fall during the winter. Aides had proposed an insurance plan in which the state would guarantee that wholesalers would get what they paid for oil, to help increase supplies.

Yesterday Almond proclaimed that plan dead.

He said prices are too volatile to risk state money, especially since prices recently have gone down.

A barrel of crude oil peaked at $37.80 on Sept. 20. While prices have fallen recently, they continue to jump up and down. Yesterday, prices rose as much as $1.34, to $32.18 a barrel, in trading on the New York Mercantile Exchange.

Market forces are the most effective solution, Almond said. "You have very high prices and a reluctance to buy high and sell low. I can understand that."

The American Petrolum Institute, a Washington-based trade association for oil dealers, says fears of shortages are misplaced. The vast majority of oil does not come from storage, but from direct shipments during the winter from refineries.

After yesterday's news conference, Clark Greene, Almond's policy director, said the state will continue to participate in a regional look at the price guarantee option. He also said that Almond had created a working group of state officials who will continue to meet through the fall and winter and would be willing to reassess options, depending on the situation.

Almond yesterday backed several lesser initiatives, including closely monitoring supplies.

Janice McClanaghan, state energy director, said after the news conference that she met Friday with the six wholesale suppliers and that they have agreed to provide inventory levels.

McClanaghan also collects price information and releases it to the public. She said no decision has been made about whether the total inventory level would be released publicly.

McClanaghan said the number is being compiled mostly for planning purposes.

When does the public have a right to know about how much oil is available in Rhode Island?

"It's not an issue of the public's right to know," she said. "You don't want to create a panic out there."

She said the numbers could change rapidly, whenever a new shipment arrives. McClanaghan said the state would have the authority to withhold the information from the public because releasing it could adversely affect the oil wholesalers.

Fogarty announced that the Emergency Management Advisory Council, which he heads, will meet today at 11 a.m. to begin reviewing the state's plan for an energy crisis. The plan, last updated three years ago, gives the state the authority to set up emergency shelters, ration oil deliveries, reduce the hours of operation or close government offices and schools, and also shut down industry.

But state Adjutant Gen. Reginald A. Centracchio, of the Rhode Island National Guard, said it would be extremely unlikely for the state to take such a drastic step as to control the dispersal of heating oil in a shortage. He said the plan's prime aim will be to assist low-income families.

Fogarty also discussed the need for more federal heating assistance for low-income families. The state has received about $10 million so far, but last year it received $13 million. The weather for much of last winter was mild, and prices are already signficantly higher.

Almond also reported that he is continuing to push for the U.S. Army Corps of Engineers to dredge the Providence River so that larger oil tankers carrying more fuel can get here. But he said that solution will not resolve the short-term problems this winter.

http://www.projo.com/cgi-bin/story.pl/news/04317052.htm

-- Martin Thompson (mthom1927@aol.com), October 03, 2000