LI gasoline, heating oil prices on rise

Gasoline and heating oil prices continue to creep up and could rise still further in coming weeks, some experts say, despite the recent weakening in futures prices for crude oil.

Regular gasoline averaged $3.154 a gallon at pumps on Long Island Wednesday, up more than 12 cents from a month ago and more than 28 cents from a year earlier, according to the AAA.

"Why is it going up? It's winter time," said Brooklyn resident Sean Caldeira, as he got gas at the Mobil Mart on Route 110 and Smith Street in Melville. "They're just sneaking this up, no one knows why. They make record profits. When is enough, enough?"

Heating oil from full-service dealers on Long Island averaged $3.288 a gallon Wednesday - up 4.1 cents from a week earlier - in a survey by the New York State Energy Research and Development Authority.

The average for the fuel that most Long Islanders use to warm their homes has risen by almost 31 cents a gallon since August. Heating oil prices usually don't peak for the season until sometime in January.

Siri Dolan, 69, a retired purchasing manager for electronics company, said she and her husband are living on fixed incomes and don't have a lot of flexibility in their budget. Last winter, Dolan said, she spent a little over $1,000 a month and expects the cost to rise to about $1,200 this winter.

"I keep my heat down very low because I can't afford it," said Dolan.

Crude oil, gasoline and heating oil futures had been rising for a variety of reasons, including the weakening of the dollar against foreign currencies.

The dollar took another hit after the Federal Reserve announced plans Nov. 3 to buy another $600 billion in government bonds to boost the economy by reducing interest rates.

Oil price analysts believe that reduced interest rates are likely to further encourage investors to switch to higher-yielding commodities, like oil, while the Fed's action would further weaken the dollar by putting more dollars into circulation. A weaker dollar makes oil a bargain for traders using foreign currencies like euros.

Crude oil had been trading in the upper $80s per barrel in recent weeks but has fallen in recent days on concern that another European banking crisis, this time in Ireland, might require a bailout by the European Union. Traders also worry about a slowdown in China's oil consumption if its government raises interest rates, as expected, to calm inflation.

Crude oil for December delivery settled Wednesday down $1.90 at $80.44 a barrel on the New York Mercantile Exchange. Bloomberg News said prices have fallen 9.2 percent from the two-year intraday high of $88.63 a barrel on Nov. 11.

Carl Larry, president of Oil Outlooks and Opinions Llc, an energy research and consulting company in Houston, says demand - and prices - are likely to continue rising right through next summer for gasoline. For heating oil customers, he said, only a warmer winter, which many are forecasting, is likely to provide some price relief. "That could be your only saving grace," he said.

Kevin Beyer, president of the Long Island Gasoline Retailers Association, said pump prices might rise further in the coming week despite the lower futures prices because retail prices haven't yet caught up with wholesale prices. "Even if you see the [futures] market dropping a little bit, the best you can hope for is that it won't creep up further on the street," he said. "But you're not going to see it go down."

Phil Flynn, energy analyst at the futures brokerage PFGBest in Chicago, notes that predictions earlier this year that oil prices would soar and never land proved wrong. He sees some relief for motorists and homeowners after Thanksgiving.

"Now we have the Chinese worried about inflation, and we have another crisis in Europe," he said. "More than likely that is going to bring prices down."The Island's major natural gas supplier, National Grid, has estimated that its customers will pay about 10 percent less this winter than last.

With Emily Dooley and Chau Lam