Wintertime heats up petroleum prices; Costlier heating oil

The cost of keeping warm is going up again. In Boston, New England's largest home heating oil supplier is already charging $1.10 a gallon for heating oil. Average price in Boston was $1.03 a gallon in November.

Nationally, prices are ranging from $1 to $1.10 a gallon. But uncertainties over OPEC's pricing intentions, reluctance of refiners to increase heating oil stocks, and a colder than normal winter make the outlook uncertain.

The US Department of Energy (DOE) estimates heating oil prices this winter may reach only $1.11 a gallon, if world crude oil prices hold steady. But they could soar as high as $1.51 a gallon if crude prices jumps as much as $16 a barrel.

Cheryl Trench, an economist with the Petroleum Industry Reasearch Foundation, suggests that crude oil price hikes may amount to $4 a barrel of less over the winter. This would translate into heating oil prices at about $1.20 a gallon.

These estimates are offered with profuse caveats. "You never really know what these guys are thinking," one anlyst cautions regarding the members of the Organization of Petroleum Exproting Countries (OPEC).

Any increase in heating oil prices is likely to hit hardest in the Northeast, where buildings often dating back to the 18th and 19th centuries are heated primarily by oil. An estimated 85 percent of the oil burned in New England homes comes from overseas sources, making the region especially vulnerable to the vagaries of world crude prices.

Demand is one factor in the price equation, and demand for heat this winter is still an open question. Heating oil consumption is directly related to winter weather, and recent forecasts see a colder-than-normal winter for the Northeast.

Another factor bearing on demand for heating oil is the rate at which consumers are moving to alternative sources of energy for space heating.

The preliminary findings of a DOE study indicate that one of every 20 single-family houses that relied on oil for heat a year ago had converted to wood heat by early fall. New Englanders lead the country in wood use, as well as wood-burning technology.

"A good deal of the Yankee tinkerer still remains," comments Andrew B. Shapiro, president of the Wood Energy Research Corporation in Camden, maine.

Moreover, a steady stream of people are converting from oil to natural gas, cheaper and considered more reliable. An estimated 383,000 oil customers will convert their burners to antural gas this year, the American Gas Association (AGA) predicts.In the Midwest, some 90 percent of the new housing is rigged for gas.

Conservation measures also have their impact on demand for heating oil.

"Fuel oil households are doing phenomenal things" to conserve energy, says a researcher at DOE. In the last year, early figures show, twice as many people -- about one in 12 -- insualted their attics. Around 14 percent have plugged energy leaks in their homes with weatherstrips and caulking.

Last winter, customers of New England Petroleum Industries used 15 percent less oil than the winter before. But part of that saving was the result of a warmer-than-normal winter in New England.