Are High Oil Prices Here to Stay?

Most of you who have been in the oil business for a long time may recollect the ’70s when we had gasoline and home heating oil shortages along with high prices. Those of us who were in the business will also remember the endless lines at the gas pumps and often making calls to get oil allocations increased. This was done just to meet the demand of our customers, nevermind growth. The main concern was keeping customers warm and serviced during this difficult time.

I’m often asked what I think about the availability and the prices of oil since we are experiencing higher than usual barrel prices, which of course has forced the fuel oil dealers to charge $3.20 per gallon and even higher in some areas. I am also a fuel oil burner user, and each time I see the price posted on my delivery ticket I shudder with disbelief. It’s been said that the prices have to come down, but I would not bet the farm on that statement. It has also been stated that the natural gas products will be cheaper than fuel oil this heating season, but I would want to see all the facts as to how this will happen, and I bet it will be a long time before the jury returns a verdict on this.

There are about 8.1 million households in the United States that use heating oil to heat their homes and about 78 percent of those households are located in New England and the central Atlantic states. Let’s take a close look at the smallest state in the U.S., Rhode Island (The Ocean State), where about 42 percent of all households, or about 172,000, heat with oil. They will see an annual increase in their fuel bill of somewhere between $300.00 to $400.00 and maybe more this heating season. We should also recognize that there are still about three million and more oil burners in basements today that are 20 years or older, as reported by a leading U.S. burner manufacturer. These types of aged burners are what I would call ‘fuel oil guzzlers” and must be replaced in order to lower the consumption rate. This is something that is in our immediate control and comes with a financial reward.

Regarding oil prices, they are here to stay until we are able to stop the ‘Enron Loophole,” which has allowed what I call the energy masked bandits to cash in at the expense of families and businesses that use heating oil. For more information, visit www.closetheenronloophole.com. We must act on what we have control of and that is install new efficient heating equipment and eliminate the oil guzzlers. We will soon be able to purchase a new boiler with a low NOx burner, new condensing and two stage warm air furnaces / boilers and the soon-to-be-introduced high low fire residential oil burner. All are designed for heating comfort, ample hot water and to lower the property owner’s energy costs. We also need to become more acquainted with the new controls that are available as they too, have the ability to support energy conservation both on the oil and electrical side as well. So are the higher oil prices here to stay? You bet, in my opinion.