AUBURN – Residents should be able to use the city’s buying power to lock in a low price for heating oil, city councilors said Monday.

Councilors voted 5-2 Monday to create a test program letting citizens join with the city’s bid to purchase oil, intended to lock in a low price for the year.

The city has aggregate oil purchasing agreements with Lewiston, Auburn schools and Androscoggin County. City Councilor Mike Farrell said his idea would include Auburn residents in the deal.

“It doesn’t cost the city anything do this,” Farrell said. “The more people join in, the better deal we can get for everyone. And not only does that give people in the program a better deal on their oil, it means the city spends less itself. Everybody wins.”

The item was not listed on Monday’s agenda, but was added by Farrell during the meeting. Farrell said it is important to get it settled quickly, since the city is expected to settle on an aggregate oil price soon.

Maineoil.com, a Web site that tracks the price of heating oil, listed the average gallon price in the Lewiston-Auburn area at $3.98 per gallon Tuesday afternoon.

“The fact is, buying heating oil is like buying winter clothes,” Farrell said. “The best deals are made in the spring, and this is when most of these deals are set up. We had to take action now, before we set a price. If we wait too long, who knows where the price could end up.”

City staffers were trying to set up the administrative details Tuesday to create the program, according to acting City Manager Laurie Smith.

“We’re trying to understand the parameters of what they want to do, including any legal issues,” she said. One concern is whether a citizen’s agreement could end up committing the city.

“We know that these oil dealers do want a commitment, so we need to understand the extent of that,” she said.

‘Soviet Russia’

Aggregate heating oil deals are not new, according to Jamie Py, president of the Maine Oil Dealers Association. Landlord groups, unions, some employers and the Maine Democratic Party are all registering people for heating oil buying programs.

But this is the first time Py has heard of a municipality doing it.

“The councilors and the citizens have to ask themselves if this is an appropriate role for a city,” Py said. “It sounds like a good idea, and there is as an example of it happening – it’s called Soviet Russia.”

Py said the deal would subvert the free market, putting the government in charge. Py said it would also be difficult for the city to manage.

“It also limits the ability of smaller local dealers to participate,” he said. “I think they’ve got to think this thing through a little more.”

But Farrell said he expects the city will just be a clearing house for names, and won’t collect money. Actual purchases would be between buyers and the oil company.

“It could be a pay-as-you go program,” he said. “You’d agree to buy a certain amount of oil and you’d get a certain price – say for 1,000 gallons for the year. If you use more, you pay the going price.”

And Farrell said the deal wouldn’t subvert the free market.

“Nobody is requiring you to sign up,” he said. “You can still work out your own deal, if you can do better.”