By Doug Fletcher,Staff Writer

Heating oil $2.15

Propane $1.91

Gasoline $2.35

Diesel $2.47

Source: Maine State Planning Office; prices are statewide averages for fuels purchased at cash price on Wednesday.
Fuel prices gushing
Agency: Heating oil to cost 50 cents more than last year

On the same day that crude oil hit a new trading high, the State Planning Office cautioned Mainers that their heating fuels will likely cost significantly more this coming winter than last year.

Citing federal energy studies, the SPO said in a statement issued late Wednesday that “heating oil prices are likely to average 50 cents higher than last year, given the current crude oil price forecast.”

It went on to note that “Propane prices are expected to be about 25 cents per gallon higher this winter than last.”

The office added: “Higher prices are likely to mean significantly higher consumer expenditures compared to last year.”

A 50-cent increase in the cost of heating oil translates to $500 in added spending for the average Maine household, which uses about 1,000 gallons during the course of a typical year.

On Wednesday, the office said No. 2 heating oil was retailing at $2.15 per gallon. That’s up 6 cents since June, when the SPO conducted its most recent survey.

Until last year, heating oil prices would traditionally plummet during the summer months when demand slackens. That didn’t happen in the summer of 2004 and it hasn’t happened this summer either.

Gasoline also is going up in price, the SPO noted. Maine’s average cash price was $2.35 per gallon for regular on Monday. In places, however, it was considerably higher.

A service station in Turner was charging $2.45 on Tuesday, and the SPO said the cash price for regular gasoline in northern Maine was already exceeding $2.50.

Diesel, the fuel used by truckers to haul goods to market, was averaging $2.47 per gallon. That’s 57 cents more than it cost a year ago.

The SPO survey and caution came on the heels of crude oil setting a new intraday trading high of more than $65 per barrel on the New York Mercantile Exchange.

The U.S. Department of Energy’s Energy Information Agency said Wednesday that forecasts indicate gasoline prices in particular will remain high through the end of 2006.

The EIA said the forecast is based on the assumption that crude oil will remain trading in the $55-per-barrel range. If it does, the agency says gasoline will retail for $2.10 and higher indefinitely. Higher crude prices, however, will result in higher retail prices as well.

The price of crude oil closed Wednesday at $64.90 per barrel. That’s up $3.03 in one week and $20.49 higher than last year at this time.

U.S. and global demand continues to put pressure on crude oil production and refining capacity, the SPO said.

According to the EIA, U.S. refineries are running at 95.8 percent of capacity with few unplanned outages. The agency is predicting higher OPEC and non-OPEC oil production during the rest of this year. Earlier this week the government revised its projections on global demand slightly downward.

Higher output and lower demand should result in reduced costs for crude oil, but speculation about shortages based on disruptions linked to politics and insurrection has kept prices high.