Copyright 2000 Gannett Company, Inc.
USA TODAY
November 20, 2000, Monday, FINAL EDITION
SECTION: NEWS; Pg. 15A
LENGTH: 979 words
HEADLINE:
Winter forecast: Heating oil runs short Cold snap could make season a pricey one
for homeowners
BYLINE: Fred Bayles
DATELINE: BOSTON
BODY:
BOSTON -- The numbers are troubling for David O'Connor and other
state
energy officials across the nation. Stocks of heating oil,
natural gas and
propane have hit record lows while a hot economy
and an anticipated cold
winter have triggered high demand.
Plugged into the unforgiving
equation of supply and demand, the
result is likely to equal one of the most
expensive winters for
the nation's homeowners and the possibility of
temporary heating
oil shortages.
"It's going to be a tough
winter," says O'Connor, the Massachusetts
commissioner of energy resources.
"We barely have enough reserves,
and the season is early."
And the
problem is not confined to those using heating oil. Homeowners
everywhere
who use electric heat won't escape the price surge.
Most states allow
utilities to pass a portion of increased fuel
costs on to the consumer. In
states with deregulated utilities,
the pass-through of costs can be even
higher. And natural gas
prices, which have remained stable over the decade,
are expected
to rise by 50% this year.
Mild weather in most of
the country has staved off rising demand
and prices of home-heating stocks.
But industry watchers and public
officials say any prolonged cold snap would
send oil prices beyond
last year's $ 2-a-gallon mark that drained consumers'
pocketbooks
and strained federal and state programs to supplement energy
costs.
"We're concerned," says Mark Mazur, acting administrator of
the Department of Energy's Energy Information Administration.
"We think
the system will be stretched."
Industry figures released last week
confirm a trend that has been
a growing problem since the home-heating oil
crunch of last winter
and the escalating gas prices of the summer.
The Energy Information Administration released statistics last
week that showed record lows in heating oil supplies despite an
increase
in production. In the Northeast, which includes New England
and the central
Atlantic states, heating oil stocks stand at 29.9
million barrels, compared
with 48.7 million barrels last year
and 60.7 million barrels for the same
week in 1998. Nationwide,
there are 115.2 million barrels, compared with
141.3 million barrels
last year.
"Stocks are incredibly low,"
says Tom Kloza, director of the
Oil Price Information Service.
"We saw as much production as the United States can muster toward
the winter. If we can't put away supplies, this market is going
to go
like a runaway train," he says. The effect of prices, already
at a seasonal
high of $ 1.50 a gallon, are being felt around the
country:
*
The number of Maine residents seeking help with their
heating costs has
already overwhelmed state agencies. Applicants
must wait until late December
for appointments to apply for subsidies.
"They're concerned," says
Vicky Doughty, director of the People's
Regional Opportunity Program, which
helps residents apply for
federal energy assistance subsidies. "They're
thinking, 'How
am I going to make it? I have to buy medicine, and I have to
buy
food. If I have to buy heat, how do I let go of those things?'
"
* New Jersey has opened five state parks and forests to
residents worried about rising fuel costs, allowing each of them
to take
five cords of wood at a premium price of $ 15 per cord
-- a bargain compared
with the $ 135-per-cord price of commercial
firewood.
*
Wisconsin officials have warned that the state's farmers
could lose $ 68
million because of 40% increases in fuel costs.
Farmers are expected to
spend $ 238 million this year for petroleum
fuels and oils, up from $ 170
million in 1999. "It's going to
be a pretty stressful season," says Ben
Brancel, state agriculture
secretary.
* In Nebraska, officials
fret that any prolonged cold weather
would quickly drain the $ 14 million
budgeted to help pay fuel
costs for low-income residents. If the funds run
dry, the state
would be hard pressed to extend further help. "Everybody here
is hoping for a mild winter," says Mike Kelly, program specialist
for
the state's Department of Health and Human Services System.
* In
South Dakota, natural gas users also are looking for
help. With prices
expected to climb 50%, the state's Low Income
Energy Assistance Program has
approved aid for more than 6,400
households -- about 1,000 more than at this
time last year.
Federal officials downplay the possibility of
shortages. Energy
Secretary Bill Richardson points to the creation this year
of
the 2 million-barrel Northeast Home Heating Oil Reserve to provide
a
cushion against a sudden drop in commercial supplies.
Richardson
also plans to attend a meeting of oil-producing and
oil-consuming nations in
Saudi Arabia to lobby for greater crude
oil production to take pressure off
the price.
"Prices will regrettably go up, but we hope to keep it at
a manageable
level," he said. "The most important step we can take right
now is to get more oil on the open market."
Experts also blame
the crisis on years of rising oil and natural
gas consumption that outpaced
production capacity. Though the
last new refinery was added to this country
in 1974, Kloza said
older facilities were able to increase production over
the past
years through plant upgrades and new technologies. But this
"refinery
creep" has reached its limits as demand for both
gasoline and
heating products continues to grow.
Kloza said the situation is likely to worsen over the next five
years as new environmental regulations require additional
refinery
steps to eliminate sulfur and other pollutants
from gasoline and
fuel oil.
"It's pure
economics," he says. " People want clean air and
to drive SUVs, but they
don't want more refineries. There's been
a tremendous amount of excess and
not a lot of sacrifice."
Contributing: The Associated Press
GRAPHIC: GRAPHIC, b/w, Suzy Parker, USA TODAY,
Source:Energy Information Administration(Map, Bar graph); PHOTO, b/w, Michael
Dwyer, AP; Anticipating the cold: Ryan Copeland, left, and John Keane load wood
at Glynn's Tree Experts in Hanover, Mass.
LOAD-DATE:
November 20, 2000 
