Heating oil $1.06 higher than year ago

Long Islanders are paying the highest price per gallon for heating oil since April, a time when petroleum prices were soaring -- despite what has so far been a mild winter.

The state Energy Research and Development Authority said oil from full-service dealers averaged $4.16 a gallon Tuesday, $1.06 higher than a year earlier and the highest since April 25, when the price was $4.24.

The increase from last year translates to an extra $291 for a homeowner to fill a standard 275-gallon household heating oil tank.

One analyst says it could have been worse. "This is actually relatively cheap compared to what it could have been if we had a really bad winter and supplies ran short, said Carl Larry, president of the Manhattan-based consulting firm Oil Outlooks and Opinions. At least, he says, prices shouldn't go much higher this season.

Experts blame the increase on a rise in the price of crude oil from less than $94 a barrel as recently as Dec. 19 to $100.59 per barrel Wednesday on the New York Mercantile Exchange. Although increases have been tempered by fears that Europe's debt crisis would dampen energy demand, traders have reacted to threats by Iran to close the Strait of Hormuz, through which about 17 percent of the world's oil is transported.

Peter Beutel, principal of the energy consulting firm Cameron Hanover in Connecticut, tells clients in Wednesday's newsletter that oil prices also have been supported this week by word of China's 9 percent economic growth rate. Heating oil is almost identical to diesel fuel, which is used widely in industry and in heavy trucking. "This Chinese growth, together with very specific oil threats from Iran, has combined with expectations for a stronger global and U.S. economy this year to create bullish visions for segments of this market," he wrote.

Larry notes also that the East Coast is short of refinery capacity with the closure last year of two Pennsylvania units, so heating oil must come from farther away.

The National Weather Service says daytime high temperatures on Long Island averaged two degrees above normal in October, 5.6 degrees above normal in November and 6 above normal in December. January so far has been about 5 degrees above normal. Demand for gasoline is down as well -- by 3.5 percent last week from a year earlier, according to MasterCard's SpendingPulse unit. Gasoline prices have been rising since the New Year as a federal subsidy for blended ethanol ended and some taxes increased. The AAA said regular gas averaged $3.69 a gallon on the Island Wednesday, up 13.1 cents from a month earlier. Prices had been declining from the recent peak of $4.284 on May 12. The record average in the AAA Long Island gasoline price survey is $4.346 a gallon, set July 8, 2008.