By Doug Fletcher,Staff Writer

A federal agency had some potentially good news for Mainers who rely on No. 2 fuel oil to heat their homes.

Inventories of the commodity are building, said the U.S. Energy Information Agency in its weekly advisory issued Wednesday afternoon.

More importantly for the region, “Heating oil inventories in New England seem more than abundant, as they are well above the average range for this time of year,” the EIA reported. The agency is an arm of the federal Department of Energy.

Growing inventories of oil, gasoline and related commodities, especially in winter, usually point to reduced demand and often translate to lower prices.

“There’s not going to be a shortage,” said Jamie Py, president of the Maine Oil Dealers Association. “There’s a legitimate value in the strength of the inventory,” he added.

Beth Nagusky, who directs the state Office of Energy Independence and Security, also found the EIA figures to be a positive sign. She cautioned, however, that the numbers can change quickly.

“There are a lot of factors at play,” she said.

A refinery fire could halt production, for example. A hurricane or other Atlantic weather abnormality could disrupt shipping, keeping fuel oil from East Coast ports. A strong and long cold snap would boost demand, possibly draining down reserves.

Still, Nagusky said, “It’s certainly better than the alternative.”

Py and Nagusky both noted that statewide heating oil prices have been falling for about a month after soaring in the wake of Hurricane Katrina’s devastation to Gulf Coast oil platforms and refineries. No. 2 has dropped about 15 cents per gallon over the past month.

Py said the inventory growth, coupled with continued moderate temperatures, could help to drive prices down more.

No. 2 is still well above last year’s prices, however, averaging near $2.50 per gallon, up nearly 50 cents.

And Py and Nagusky also noted that projections for natural gas shortages, if they come true, could affect heating oil costs.

Much of the region’s electricity is generated by power plants that burn natural gas as a fuel. When natural gas is in short supply, or when it spikes in price, those generators switch off to oil fuels, No. 2 or No. 6.

“A dual-burning generating plant can go through 250 gallons (of No. 2) a minute,” said Nagusky.

Py said that such a high level of use would soon draw down inventories, resulting in higher oil prices.

EIA projections show natural gas prices soaring about 50 percent this winter. Heating oil is expected to increase in price by about 30 percent, but that’s on top of a 35 percent increase last year.

Higher inventories could help to curb the projected increases.

“It’s too early to say we’re out of the woods,” said Py of the winter’s fuel supply, “but it’s better when prices are falling.”