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Northeast heating oil price expected to rise modestly

Home heating oil deliver. (October 2007)

Home heating oil deliver. (October 2007) Photo Credit: Getty Images

WASHINGTON - Heating oil prices are projected to rise modestly this winter, giving homeowners in the Northeast another year of relief from the sky-high prices they were paying two years ago.

The U.S. Energy Information Administration is projecting that average residential prices in the Northeast will climb gradually in the months ahead before topping out at $3.13 a gallon in the dead of winter. Analysts and oil company officials said they don't expect extreme price swings like two years ago, when prices soared to over $4.50 a gallon.

The current price for home heating oil on Long Island is about $3, according to the New York State Energy and Development Authority. The agency keeps records of prices year-around. 

Homeowners in the Northeast each summer try to project what sort of heating oil bills they can look forward to during the upcoming cold-weather season. A higher proportion of people in the Northeast - New England, New York, New Jersey and Pennsylvania - use oil as their primary heating source than in any other region in the country.

Oil prices rise in tandem with crude oil prices, said Neil Gamson, an economist with the federal agency. Last winter, crude averaged about $77 a barrel, he said. This winter, the EIA expects oil to increase to about $81 a barrel.

"Heating oil prices'll go up if crude oil prices go up, and that's what we're projecting - but not by a lot," he said.

In its July short-term energy outlook report, the EIA said heating oil sold for $2.74 a gallon on average in the Northeast last month. The report projects that prices will gradually increase each month until they top out at $3.13 a gallon in February - a 14 percent increase from June - before beginning a gradual decline.

In October, the USEIA will release its annual heating fuels winter outlook report with more detailed projections.

John Peters, president of Downeast Energy in Brunswick, Maine, said hopes that the recent financial reform overhaul passed in Congress will result in less speculation in world oil markets, which was largely blamed when crude oil prices rocketed to nearly $150 a barrel in the summer of 2008.

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