SJ. Faces Record Fuel Prices

Winter forecast holds $600 deliveries

CourierPostOnline — Sunday, November 11, 2007

By EILEEN SMITH Courier-Post Staff

The thought of paying for fuel oil makes Mabel Johnson shiver.

"I have to keep the house warm, so I have no choice but to buy oil – and that's scary," she said.

Johnson, of Pennsauken, and other consumers are facing record fuel bills this winter. Last week, the average price of heating oil hit $3.05 a gallon, an all-time high, according to a survey of dealers in Burlington, Camden and Gloucester counties by the New Jersey Citizen Action Oil Group.

"This is a very frustrating time for a lot of consumers," said Wende Nachman, director of the cooperative consumer group in Camden.

After an unseasonably warm October, temperatures are turning chilly. Johnson, who has delayed ordering oil, expects to call this week to arrange for a delivery.

"I can't put it off any longer," she said.

Nachman said the average consumer receives 200 gallons of oil per delivery and bums 800 gallons per heating season.

"At today's prices, that means coming up with at least $600 every time you need oil," she said.

The oil group helps members to negotiate discounts on prices, which can reduce the tab by as much as 60 cents a gallon. Consumers can expect to save an average of $400 a season.

"I heat with oil and I personally saved $400 last year through the program," Nachman said.

This year, consumer response to the oil group has been overwhelming. "Our staff has a hard time eating lunch because the phones are always ringing," she said.

Consumers who rely on natural gas can expect rates slightly lower than last year. In October, Folsom-based South Jersey Gas announced it would drop prices by 4.6 percent, which is expected to translate to savings of $7.49 per month for the average customer.

With crude oil prices up $35 per barrel since Labor Day and nearing the $100-per-barrel mark, the U.S. Energy Information Administration projects heating oil costs will increase 22 percent. The EIA said consumers in the Northeast can expect to pay $1,827 this winter to keep warm, compared to $1,499 last year.

So how did oil prices get so high?

Blame it on greedy speculators who are driving up the price of oil futures, said Eric DeGesero, executive vice president of the Fuel Merchants Association of New Jersey.

"Investment funds and hedge funds that set the price of oil are having a field day," he said. "There is absolutely no logical reason why oil should be this expensive."

DeGesero said fuel dealers are suffering along with their customers.

"The small businessman who is delivering your oil is hurting, too," he said. "When prices are high he has to keep his margins lower. Plus, his customers are mad at him."

To mitigate higher costs, Johnson said she will keep her thermostat on 68 degrees when she is home – and turn it down a few more degrees at night and when she's at work.

Nachman also suggests consumers work out a budget plan with oil providers, spreading out payments equally over 12 months.

Avoid locking in at a specific price, she advised. Instead, ask for a price cap.

"If the price of oil falls and you're locked in you wind up paying more than it's worth," she said.

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