PORTLAND – In the state most dependent on heating oil, prices are now less than half of their peak last summer, an unprecedented plunge that spells good news for customers, dealers and the region’s economy.

The latest state survey this week indicates the average cash price for heating oil dropped another nickel to $2.15 a gallon, the lowest since 2005. By contrast, prices shot as high as $4.71 last July before retreating with a vengeance.

Nationally, the price was $2.22, down from $3.55 at the same time a year ago, the Energy Information Administration said.

“The price has collapsed. That’s a good thing for America, it’s a good thing for Maine, it’s a good thing for consumers, it’s a good thing for our economy,” said John Peters, president of Downeast Energy and Building Supply in Brunswick, one of the state’s largest dealers.

Dealers say future price changes will be smaller and will likely be dictated by supply and demand, rather than speculation by hedge funds and Wall Street investment houses, which were blamed for last year’s spike.

Roughly 80 percent of Maine households heat with oil, a fuel used primarily in the Northeast. With the average Maine home burning slightly more than 1,000 gallons a year, residents in this state with the region’s lowest per-capita income faced the prospect of seeing about $5,000 go up their chimneys.

Now, that figure has been cut by at least half, despite the colder-than-normal weather that has gripped the state the past two months.

The steep decline has been a boon to Maine households trying to balance recession-ravaged budgets. Some customers on monthly budget plans have been notified that they can either skip payments or pay a reduced amount the rest of the year.

“I was in heaven,” said Remi St. Onge of Brunswick, an 80-year-old retiree living on a fixed income, whose monthly payment dropped from $383 to $287.

Even with lower prices, some people are still struggling to pay fuel bills. More than 50,000 low-income households in Maine are receiving help under the federally funded Low Income Home Energy Assistance Program. This year’s benefit is expected to average $940, enough for about 440 gallons of oil.

About 50,000 households took advantage of LIHEAP last year.

Rose Scribner, who heads the Indian Women’s Mission on Indian Island, says a lot of people have exhausted their LIHEAP money and can’t afford fuel even at today’s lower prices.

“First it was too high and they couldn’t afford the oil even if they had a job,” Scribner said. “Now, with the economy gone crazy and with no job, even though oil prices have gone down they’re still having a hard time.”

Amid the economic doom and gloom, the lower prices are also providing a boost to Maine’s businesses and state and local governments as they struggle to balance their budgets.

Perhaps the only Mainers not sharing in the benefits of cheaper fuel are those who signed up with their dealers last summer for fixed-price contracts without paying extra for protection if prices fall.

“A number of them have buyer’s remorse,” said Peters, who suggested that those who opted for a locked-in price were looking for predictability in their heating costs.

In Maine, most dealers will be setting their fixed-price rates in the spring. If the market remains as it is today, they will be looking at between $2 and $2.50 per gallon, said Jamie Py, president of the Maine Oil Dealers’ Association.

In any event, Py doesn’t see a quick return to last summer’s stratospheric levels.

“There could be a price plummet due to lack of demand, or if hopefully the economy begins to rebound it should drive prices up a little bit, but I don’t think we’re going to go up to where we were anytime soon,” he said.

Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.