New Englanders Shell Shocked as Home Heating Oil Prices Skyrocket
The situation is so dire in New England that some in Congress are asking President Biden to release fuel oil from the nation’s emergency stockpiles to reduce prices, as he has done with crude petroleum.
Add home heating oil to the growing list of energy products in short supply as the nation steels itself for a long winter.
Energy companies in New England say supplies of the fuel, which many in the northeast use to heat their homes, are dwindling even before the cold weather sets in. Prices have skyrocketed since last season, and suppliers say they are already rationing the fuel after stockpiles dropped to a third of their normal levels.
One industry official told Bloomberg that some wholesalers are limiting the amount they deliver to retailers as demand surges. Those retailers must then ration the amount they sell to homeowners.
Homeowners are described as shell shocked by the prices they are paying, with the average wholesale cost of a gallon of fuel nearly doubling since last year. Customers are paying an average of $5.70 a gallon to fill the 275-gallon tanks that are common in most homes, according to the U.S. Energy Information Administration, or more than $1,500. Last year in the same period, the price was hovering at about $3.20 a gallon.
“We expect that the 4 percent of U.S. households that use heating oil as the primary space-heating fuel, mostly located in the Northeast, will spend about $2,354 on average this winter, up 27% from last winter,” the EIA said in its most recent winter fuels outlook. “Our expectation of higher heating costs is based on our forecast of a 16 percent increase in heating oil prices compared with last winter and a 9 percent increase in consumption.”
The situation is so dire that many members of Congress from the New England states are asking President Biden to do for home heating oil what he has already done with crude petroleum — release more supply from emergency stockpiles. They have asked the president to release reserves from what is known as the Northeast Home Heating Oil Reserve to try to nudge down prices.
“Families should not be forced to make hard choices about keeping loved ones warm and healthy and putting food on the table,” the lawmakers said in a letter to Mr. Biden. “We stand ready to work with you and your administration to take the steps necessary to shore up New England’s supply of heating oil so that families throughout our states are not faced with this impossible choice.”
There are many reasons for the supply crunch and high prices, chief among them the president’s push to stem America’s reliance on fossil fuels in the name of combating climate change. Mr. Biden has canceled pipeline projects, halted federal leases for oil exploration and development, and discouraged big banks from financing new projects in the industry.
The director of the White House’s National Economic Council, Brian Deese, said earlier this week in an appearance on Bloomberg TV that diesel fuel inventories are “unacceptably low” and promised that “all options are on the table” in their efforts to boost supply and drive down prices.
In a note to investors earlier this week, Goldman Sachs said the shortages being experienced in the northeast will likely spread to the rest of the country in the coming months and continue to put pressure on prices. The administration’s hostility toward fossil fuel companies has led to refining shortfalls for which there is no easy policy solution, the bank warned.
“Refining constraints can create a sharp wedge between where crude and product markets clear, making policy management of crude supply less effective at controlling consumer prices,” the bank’s analysts said in the note.