As winter wanes, No. 2 is getting less costly. Don’t expect the same for gasoline.
Heating oil prices are winding down with the winter season.
This week’s state survey of the cost for No. 2 shows a price slip of a penny, to $1.52 per gallon.
“The simple answer is: It’s supply and demand,” said Jamie Py, president of the Maine Oil Dealers Association.
Despite soaring crude oil prices that in turn are fueling record high gasoline charges, the changing weather is giving homeowners a break. Motorists won’t be as fortunate.
Py said demand has lessened for No. 2, the source of heat for well over half of Maine’s homes, due largely to slightly warmer temperatures than average in February and March. Prices will probably slip a bit more, he said, as spring takes hold.
Betsy Elder, who monitors heating oil prices for the State Planning Office, agreed, to an extent.
She said oil dealers are dropping prices because they don’t want to be saddled with excess inventory once the heating season ends.
People shouldn’t expect too much of a break, though. Py said that with crude oil so highly priced – it was fetching $37 per 42-gallon barrel Tuesday on the New York Mercantile Exchange – anything made from oil will remain costly.
Crude’s pricing is already reflected in nationally record-high placards over gasoline pumps, he noted.
Py said Mainers probably won’t be able to lock in fuel oil at $1.19 per gallon for next season as they could at the start of the now just-ending heating period.
‘Global events’
“They’ll probably be paying a little bit more” for oil for next winter, he said.
“Global events” remain the wildcard, Py noted.
The U.S. war against Iraq, which launched just a year ago, and disruptions in Venezuelan oil supplies pushed the price of No. 2 to $1.74 in March 2003. This week’s price was down 22-cents a gallon from that tab. Several years ago, extreme early winter weather in Europe led suppliers to send No. 2 there, resulting in inventory shortages on East Coast that drove No. 2 to as much as $1.80 per gallon.
Factors at play now include a burgeoning Asian economy that’s seeing China buying up more and more of the world’s supply of crude oil, an aging U.S. refinery infrastructure and seasonal changeovers and retooling throughout much of the oil industry.
Py said those factors indicate that even as No. 2 prices dip, gasoline will remain high, although he doesn’t think they’ll go much higher than today.
“That’s the real story,” said Elder, “trying to prognosticate on pricing for the coming driving season.”
She noted that the U.S. Department of Energy in February forecast pump prices of $1.57 per gallon for April and May, but that forecast was based on crude at $35 per barrel. Elder said that for every $1 increase in the price of crude, pump prices will increase about 2.4 cents.
She also noted that prices already top the forecast, and suggested that a 10-to-12-cent per gallon increase could be likely.
“Isolated markets” could see spikes as the spring-into-summer driving season takes hold, Py said, but he doubted that Mainers would see prices as high as the $2.30-plus per gallon that some Californians are paying.
Py and Elder both said the ban of MTBE in gasoline by Connecticut and New York could affect supplies in the Northeast. If shortages develop as summer nears, price spikes become more likely.
Right now in central Maine, regular unleaded was retailing in the $1.66 per gallon range at many stations.
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