Press of Atlantic City

Check Your Heating Costs Before Planning That Winter Vacation

Press of Atlantic City — Sunday, September 14, 2008

By ERIK ORTIZ
Staff Writer

In budgeting for this winter's heating oil, homeowner Franklin Clayton is expecting to get walloped by higher prices. Instead of paying $142 per month like he did last year, this season he's setting aside $255 per month.

Having planned properly for his retirement, the Little Egg Harbor Township resident says he has a financial cushion in case of such spiraling expenses. Still, he says, prices are getting out of hand for the average consumer.

"I don't go on vacations," Clayton, 60, said last week.

With oil prices having shot to historic highs this summer, the effect on homeowners who will heat their homes with fuel oil could be chilling, consumer advocates say.

Their worries come after the federal Energy Information Administration said last week that heating oil costs for the average household would increase by 30 percent over last winter. For those using natural gas, it would go up by 19 percent, and for propane users by 13 percent.

"There's going to be a real crisis this winter," said Wende Nachman, director of New Jersey Citizen Action Oil Group, which helps its members save about 20 cents per gallon on home heating oil.

"In the summer time, our membership numbers are down because people aren't thinking of heating oil," she added. "But the prices are so bad that people are calling us now. It's a sign of the times to come this winter."

While this winter's heating bills are certain to be higher than last year, the price of crude oil has been falling recently – about 30 percent since closing at more than $145 per barrel in July. Oil prices slid below $100 per barrel Friday for the first time in five months.

The threat of hurricanes shutting down oil production in the Gulf Coast have forced prices back up.

This winter, temperatures again will be a factor in costs, said Brian Milne, the New Jersey-based editor of DTN Refined Fuels, an energy news service.

"If it's colder than usual, you'll have higher demand," Milne said. "That could challenge your supply ... and you can get a price spike."

He said there was a large build-up of crude supplies this year, although the refineries were churning out less gasoline because high gas prices led to a downturn in consumption.

Home heating oil providers are able to pass on lower costs to their customers.

At Woodruff Energy in Bridgeton, its biofuel blend was selling at $3.63 per gallon last week, down from a high of $4.64 this year, but still almost $1.20 more from a year ago, said co-president Bob Woodruff Sr.

Riggins Inc. in Vineland was selling fuel oil at about $3.50 per gallon.

President Paul Riggins said the federal government needs to rein in the oil speculators blamed for pushing prices upward.

"It's just ridiculous what they're doing," Riggins said.

Heating oil will remain costlier than natural gas or propane this winter, according to the Energy Information Administration, which might influence some homeowners to switch their heating systems.

A Press analysis of the most recent census figures finds the total number of residents in Atlantic, Cape May, Cumberland and Ocean counties who use oil or kerosene to heat their homes dropped from 14.5 percent of all residents in 2004 to 13.9 percent in 2005.

Meanwhile, the number of those who use utility gas rose slightly from 63.9 percent in 2004 to 64.4 percent in 2005.

Census figures also show slight increases in the number of residents in the region selecting electricity or bottled, tank or liquefied petroleum gas to keep their homes warm.

South Jersey Gas, the region's major natural gas supplier, built up its customer base this past year. At the end of 2007, SJG reported 312,969 residential customers, including a net addition of 5,050 residential customers that year, according to its annual report filed with the U.S. Securities and Exchange Commission.

To switch a home's heating unit from fuel oil to natural gas could cost about $4,000, Woodruff said, which might not be worth it since prices in the fuel oil and natural gas markets are so volatile anyway.

"All energy costs are up, and it's hard for people," Woodruff said. "Its creating a problem for customers."

Heating sources by the numbers

Percentage of the 430,000 residents of Atlantic, Cape May, Cumberland and Ocean counties who heat their homes with the following:

Sources: U.S. Census Bureau's 2006 American Community Survey, Press analysis

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