Feds: Cold winter will keep heating costs expensive

Nick Morfovasilis secures the hose and gun on Nick Morfovasilis secures the hose and gun on the truck after making a home heating oil delivery. (Oct. 3, 2012) Photo Credit: Newsday / Audrey C. Tiernan

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Long Islanders who use oil to heat their homes can expect this winter to cost almost as much as last year.

And residents who use natural gas may see their costs rise a bit.

The U.S. Department of Energy expects heating oil customers to spend 2 percent less this winter than last, even though it expects prices to be about 5 percent lower. That's because it predicts consumption will rise 3 percent on expectations that this winter will be colder than last in the Northeast.

Long Islanders may be able to dodge most, but not all, of the federal agency's prediction that natural gas prices will be 14 percent higher nationally than last winter. The Island's main gas supplier, National Grid, said its customers won't see much more than a 1 percent increase. "Although natural gas prices are forecast to increase this winter under current market conditions, National Grid is able to temper those increases because of its purchasing program," spokeswoman Wendy Ladd said in an email.

About two-thirds of Long Island homes are heated with oil and so are many businesses.

Government forecasters expect heating oil to be slightly cheaper because crude oil prices are forecast to be lower this winter and because demand is steadily being reduced by conversions to gas.

Private analysts agree up to a point. "The big drivers will be that crude oil prices are lower and" that some oil customers are converting to natural gas, said Andy Lipow, president of Houston consulting company Lipow Oil Associates LLC.

But some other private analysts note that heating oil is nearly identical to diesel fuel, demand for which is growing rapidly worldwide for agriculture, industry and transportation.

Crude oil has fallen in recent weeks. The benchmark U.S. grade dropped from a recent high of $110 a barrel Sept. 6 to a close of $99.22 Monday as fears of U.S. military involvement in the Syrian civil war have eased. Crude was trading in the mid- to high $90s range in January and February.

At least local motorists are getting a break. The Long Island average for regular gasoline has fallen 38 cents from the recent peak on Sept. 4 of $3.963 a gallon, to $3.583 yesterday, according to a AAA survey of cash prices. That's the lowest average since Jan. 3, 2012.

Temperature-wise, last heating season was normal on Long Island, said the Oil Heat Institute of Long Island. But it was a record-breaker in terms of cost; oil at full-service dealers averaged $4.369 a gallon on Feb. 2, the highest ever in winter, according to the State Energy Research and Development Authority. The average was $4.064 on Monday a week ago, about 23 cents lower than a year earlier.

Natural gas is cheaper. National Grid calculates its October residential price of $1.53 per therm as equivalent to heating oil at $2.13 a gallon.

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