Experts are warning that this winter is likely to be considerably more expensive than last for homeowners who heat with oil.
Meanwhile, gasoline prices continue their slow decline; regular averaged $3.936 a gallon on Long Island Wednesday, down 3.7 cents from a week earlier, the AAA said, though still $1.03 higher than a year ago.
Carl Larry, director of energy derivatives and research at Blue Ocean Brokerage Llc in Manhattan, says drivers can expect pump prices to drop by at least another 10 cents in coming weeks if crude oil stays in the low to mid-$80s range per barrel.
Barring the double-dip recession that some economists are worried about, prices for gasoline and heating oil are likely to remain above last year's in the months to come.
Heating oil has fallen by 29 cents a gallon on Long Island from last season's peak of $4.38, reached on April 11 as crude oil prices soared to more than $100 a barrel. But the fuel that heats most Long Island homes remains almost $1 a gallon costlier than a year ago, at $3.946 a gallon, so that a homeowner would pay an extra $265 to fill the typical 275-gallon tank.
While demand for heating oil is seasonally weak, Larry notes that the fuel is nearly identical to those used by diesel trucks and by utilities to make electricity. "Prices are still high, and the demand has been pretty steady for fuel for electrical generation and transportation," he said.
An improvement in the U.S. and world economies would increase demand for electricity and for goods carried by trucks, he said. "If the economy steadies out and we see any kind of growth, that could mean higher prices," Larry said.
Wednesday, heating oil futures rose in trading on the New York Mercantile Exchange, which Larry said was on concern that Hurricane Irene might disrupt East Coast refineries.
Joe Roy, Long Island coordinator for the New York Public Interest Research Group's heating oil cooperative, says the market's volatility is likely to discourage some oil retailers from offering fixed or capped prices for fear of taking big losses if prices soar unexpectedly. "The larger dealers will offer just about everything," he said, "but many of the smaller dealers will go back to a straight, variable, price."
Kevin Rooney, chief executive of the Oil Heat Institute of Long Island, agrees but adds that continued economic weakness and a quick return of Libyan oil to the market could exert downward pressure on prices. "It is going to be more expensive," he said. "How much more expensive, no one knows."
The record average for heating oil on Long Island is $4.93, set in July of 2008.
Natural gas, a relative bargain in recent years, cost the equivalent of oil at about $2.50 a gallon in April, as calculated by the Oil Heat Institute.
PRICES ON LONG ISLAND
GALLON OF GASOLINE
$3.973 Week ago
$2.903 Year ago
GALLON OF HEATING OIL
$3.946 Aug. 15
$4.062 July 25
$2.979 Year ago
Sources: AAA, New York State energy research and development authority