The Times, Trenton

Tale Of Two Winters

Heating oil prices tumble

The Times, Trenton — Wednesday, January 24, 2007

By JULIE O'CONNOR

Winter has been favorable to Mark Cavallo. The Hamilton resident didn't need his home heating oil tank filled until two weeks ago.

Heating oil is usually "a huge chunk" of money, he said.

But because of the milder weather, Cavallo, an engineer, has saved a portion of that cost – and so have many of his co-workers.

"They're all smiles, too," he said.

Unseasonably warm temperatures since November have been a windfall for many homeowners. They dragged down demand and prices for heating oil, much to the dismay of oil suppliers.

"This is the first time in several years that oil prices have actually dropped as opposed to increasing," said Wende Nachman, director of the
New Jersey Citizen Action Oil Group, a cooperative started in 1983 that buys heating oil for about 3,500 members.

"Prices are down almost a dollar since last season," said Nachman. "It's been great for consumers."

Heating oil prices have continued to decline because of the initial belief that heating oil supplies would go unused because of a warmer winter, the Associated Press reported on Jan. 8.

About 20,000 households in Mercer County use heating oil, according to the 2005 U.S. Census. That's about 14 percent of Mercer County households.

Retail prices for heating oil in New Jersey were around $3 a gallon last year, according to the Oil Group. This season, retail prices have been about $2.20 a gallon.

Yesterday, heating oil was priced at about $2.20 per gallon in Mercer County, according to the Oil Group's survey of suppliers.

Sales per gallon have been down 20 to 30 percent this winter, said Eric DeGesero, executive vice president of the Fuel Merchants Association of New Jersey, which represents more than 600 petroleum marketers and industry suppliers in the state.

"From the heating oil dealer's perspective, this winter is basically over," he said. "So many sales were lost in November, December, and the beginning of January, and you can't recover those lost sales."

Sixty percent of yearly demand for heat usually occurs in the 90 days of December, January and February, he explained.

It's been a tough winter for suppliers. The industry is seasonal, as are many of its workers.

"There might be a guy who drives a dump truck during the summertime," said DeGesero. "In the wintertime, when road construction stops, he'll switch and drive an oil truck. We never hired those seasonal workers this year because there was no demand for that."

Oil dealers need to make their money from November to March in order to pay bills for the rest of the year, DeGesero said.

"We still have to pay property taxes, heath insurance and payroll," he added. "This is going to have a very, very serious impact on our members' profitability for the year."

In December, local demand for heating oil was "way below" last year, said Ed Griffin, general manager of Princeton Fuel Oil company, which provides heating and air-conditioning services for about 10,000 customers in Princeton, Trenton, and Lower Bucks County, Pa. Service calls and sales of new equipment have also been down.

Griffin estimated his company's service calls to be about 230 this December, compared to about 350 last December.

"Nothing was being pushed," he said of the heating equipment. "Nothing was breaking."

While Griffin said he did not lay off any employees, he has heard of layoffs by other area providers. Many just sent their employees home on slower weeks.

But struggling homeowners benefited from the price break, said Nachman of the Oil Group.

"Oil's still pretty unaffordable for lots of people," she remarked.

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