Jerseyans feeling heat on oil price

12/02/00

BY DAVID RESS STAFF WRITER

If the cold air in the morning these days makes you gasp, get braced for your oil bill.

New Jerseyans who didn't join the spring and summer rush to lock in their winter fuel supply are facing some bad news now: All those warnings from earlier this year that oil prices would be up 50 percent from last year have come true.

The price of home heating oil is running above $1.60 a gallon at full-service fuel dealers -- the companies that promise to make sure your furnace is working all right, in addition to delivering oil. Going the cash-and-carry route may save about a dime, if you can find a deal, fuel merchants and consumers say.

For a typical New Jersey homeowner, burning a bit less than 1,000 gallons through the cold months, that means about another $500 on this year's heating bill.

"If I have to, I'll just wear an overcoat in the house to stay warm," said Anthony Pasculli, 63, of North Bergen. "These prices are just a rip-off."

Pasculli, a disabled Army vet, is down to a half a tank and has been looking to buy a bit more than 400 gallons, the first of the two or three fill-ups he expects he'll need this winter. He's lined up a couple of space heaters to keep next to his recliner, but he's fretting because his wife has been in and out of hospital this year, and he wants to keep the house warm for her.

"We're getting inundated with calls," said Cathy Raniolo, of New Jersey Citizen Action's buying cooperative for heating oil. "People are looking to fill their tanks, they're shocked by the prices and they're running around trying to find a good deal."

People who heat with natural gas are also facing bigger bills. Last month, state regulators approved rate increases of 16 percent for three utilities serving more than 2 million customers.

But some Jerseyans haven't felt the oil price pinch yet. Local social service agencies say they haven't fielded many calls from consumers seeking help with heating oil bills -- but they're bracing for calls in the weeks to come.

And some Jerseyans have prepared for the squeeze. Eric DeGesero, executive director of the New Jersey Fuel Merchants Association, said his members reported a sharp rise this spring and summer in the number of homeowners signing up for programs to protect themselves against winter price spikes.

"We paid a $25 fee to lock in the price and it was worth it, it really paid off," said Francine Byrne, who locked in a $1.10 per gallon price for oil last summer. She and her husband used that locked-in price, which runs through next July, as a selling feature for their Glen Ridge home. The couple has moved to a gas-heated home at the Shore and "I don't even want to think about the bills," Byrne said.

She knew locking in a price would be an especially good idea after last winter. That's when heating oil prices spiked above $2 a gallon, and the state stepped in to try to free up supplies by encouraging big energy users to burn natural gas instead of heating oil. Plenty of homeowners took that as warning they'd better get set early for this winter's bills, DeGesero said.

Other homeowners have opted for price cap programs instead of locked-in price deals. Others chose so called pre-buy programs, in which they paid up front for a winter's worth of oil, at lower, summertime prices. Many simply filled up their oil tanks months ahead of the usual time.

"There's a lot more oil now in dealers' and homeowners' tanks," DeGesero said. He thinks that's why U.S. Energy Department reports show record lows in the amount of oil stockpiled at refineries. In the New Jersey-New York-Pennsylvania region, stockpiles of home heating oil stand at about 23.4 million barrels, one-third less than last year.

To keep from being squeezed by selling oil to homeowners at summer prices and having to buy their supplies at wintertime peaks, some dealers turned to futures markets -- a financial bet on higher prices. The profits dealers made on such bets offset some of the money they have to spend now buying oil.

But, for homeowners, hedging can be expensive.

Many balked at paying, up front, for a whole year's supply, said DeGesero.

And prices in the spring and summer, while well below the winter peaks, were above the levels they'd been at through most of 1999. Some homeowners thought that was too high a price to lock in with a price cap or price guarantee deal.

And plenty still like what fuel dealers call the "will call" approach -- when the tank is low, they prefer to take their chances calling around to find the best deal, said Frank Olivio, owner of Blue Ribbon Fuel Co. in Nutley.

"I don't think anyone's really surprised too much by the higher prices," Olivio said. "I'm not hearing it, anyway. There was enough in the news about oil prices over the summer, and people looked around and saw what was happening to gas prices, that I don't think too many people are shocked now."

http://www.nj.com/news/ledger/index.ssf?/page1/ledger/11a3070.html

-- Martin Thompson (mthom1927@aol.com), December 02, 2000