Fuel oil forecast: 8 percent cost hike

Despite warm weather in October and November, it's still shaping up to be the most expensive winter ever for heating homes with oil.

Federal energy forecasters say homeowners using fuel oil will pay 8 percent more to heat their homes this winter compared with last -- precisely what they predicted in mid-October -- because crude oil, which gets refined into heating oil, has gotten more expensive since then. Warm weather sometimes drives down the cost of crude oil, but not this season.

If October and November temperatures had been normal, the increase in heating costs would have been even higher.

For natural gas customers -- about a third of Long Island homeowners -- the news is better in a fuels outlook released Tuesday by the U.S. Department of Energy. The warm autumn, and small increases in gas prices, should translate into heating bills 2.2 percent lower this season. The energy department had in October forecast gas-heat bills would be 3 percent higher.

This November was the warmest on record on Long Island, the National Weather Service said, with an average high temperature of 58.8 degrees, 5.6 degrees higher than normal. October was two degrees above normal. So, the Energy Department said, heating oil customers probably will use about 28 gallons less this winter than last, or about 651 gallons in total.

But consumers are paying far more for that fuel. Heating oil averaged $4.075 a gallon on Monday at full-service dealers in Nassau and Suffolk counties, said the state Energy Research and Development Authority. That's up 1.1 cents from a week earlier and almost 70 cents a gallon higher than at this time last year.

Andy Lipow, president of Houston consulting company Lipow Oil Associates Llc, thinks heating oil prices will be stable in the near term. "The supply situation is getting better here in the U.S.," he said.

U.S. benchmark crude oil was $100.49 a barrel Wednesday, up from about $85 in mid-October. In Tuesday's report the energy department raised its 2012 forecast for crude oil from an average of $91.13 to $98 a barrel.

For motorists, meanwhile, gas prices continue to decline, and the energy department said it expects prices "at or below current levels" until early spring, the season that usually sees increased driving. Regular gas averaged $3.602 a gallon on Long Island Wednesday, the AAA said, down about 9 cents from a month earlier.