| Heating Oil Spike Alarms Downeasters |
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| Written by James Straub | |
| Wednesday, November 14, 2007 | |
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ELLSWORTH — With the cost of crude oil approaching $100 a barrel and Mainers paying more than $3 a gallon for heating oil, the state’s oil dealers want to know why.
Consumers, on the other hand, want to know what — as in what can they do to make it through the winter. “It’s unbelievable how frantic they’re getting,” Rusty Roberts said of the area residents who turn to the Tree of Life Food Pantry in Blue Hill when they’re in need. “I don’t know what they’re going to do. I don’t know what’s going to happen to these people.” Escalating heating fuel and gasoline prices hit consumers with a one-two punch. It reduces the amount of disposable cash available to most households and contributes to an increase in the cost of other essentials, such as groceries. Those who budget for heating schools and hospitals are keeping a close eye on oil prices. Union 76 Superintendent Bob Webster was pleased this week because he decided to pre-buy heating oil at a locked-in price for the schools in Deer Isle, Brooklin and Sedgwick. Last summer, Webster ordered this winter’s oil supply for the schools at a cost of $2.40 a gallon. His worries about the cost of oil products are not entirely eliminated, however. The cost of diesel fuel is rising rapidly, and Webster doesn’t have any locked in price for the gallons of diesel needed to operate school buses. David Bridgham, business manager for Union 92, was lamenting his decision not to lock in heating oil prices with a pre-buy program this year. “Like many consumers, I was one who pre-bought last year and would have paid less if I hadn’t,” he said. Last year, Bridgham locked in a price of $2.05 a gallon, but would have paid less through much of the winter. He said he was convinced all summer that oil prices would rise up to September then “drop like a rock, but they kept going up.” Though the prices are not locked in this year, Bridgham gets a favorable price because of a group-buying approach he started three years ago, long before regionalization became the rage, he said. When Bridgham sends out for oil bids, he is buying a winter’s supply for far more than the schools in Union 92. Union 92 includes the towns of Hancock, Lamoine, Mariaville, Otis, Surry and Trenton. Bridgham doesn’t only buy heating oil for the schools in Union 92. He also buys oil supplies for most of the town offices and fire stations, and it doesn’t stop there. Bridgham’s buying power also includes schools, town offices and fire stations in Union 96, which includes the towns of Gouldsboro, Steuben, Winter Harbor, Sorrento, Sullivan and Franklin. When Bridgham calls on oil dealers, he is looking to buy 300,000 gallons of heating oil a year. That buying clout has attracted a low price. Entities pay the going wholesale price plus 4 cents a gallon, which is about 30 cents below the retail price. Still, the current price of heating oil can jeopardize budgets. Bridgham said Union 92 schools budgeted at $2.25 a gallon, but are currently paying about $2.70. The volume of oil burned in schools could work in favor of the schools. Bridgham said most oil tanks in schools hold 4,000 to 4,500 gallons. Though most schools usually fill the tank each month, it is possible to skip a delivery and ride out a spike in the cost of fuel. Jeff Provenzano, chief financial officer at Blue Hill Memorial Hospital, said the hospital opted to not pre-buy its oil supply this year because it is working out details with its parent company, Eastern Maine Healthcare Systems, that would make the local hospital part of a much larger buying group. “It’s a real challenge for us,” he said of the rise in oil costs. For the current fiscal year, which ends next April 1, the hospital has budgeted $220,000 for heating oil, based on $2.53 a gallon. “It’s a huge hit at $3 a gallon,” Provenzano said. “We are off budget by $40,000. It also drives up electricity and other costs. As those rise, it becomes that much more of a challenge for us to operate.” Scott Kimball, district manager at Dead River Co. in Ellsworth, said the number of customers who pre-bought oil this year is about half as many as last year. He said it’s a small number compared to the number of customers who participate in the company’s most popular buying program, Easy Cap. The Easy Cap program allows consumers to pre-buy oil at a price not to exceed an agreed-on cap. Should the market price go below the cap, customers pay the lower market price. Both of Dead River’s pre-buy programs ended Oct. 31. Kimball said the cap in the Easy Cap program was set at $2.779. Homeowners are advised to tighten their houses and add insulation to offset rising fuel costs, but Dan Curtis, branch manager at EBS in Ellsworth, said that can be difficult for many because higher costs for necessities have depleted their discretionary budgets. Curtis said the store has seen an increase in demand for alternative heat sources, including wood stoves and pellet stoves. He said the store also has experienced a sharp increase in its free delivery service, as customers opt for the service, rather than driving into town. |
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