In Maine, 'a lot of fear out there' as heating oil prices keep rising

Families who don't qualify for assistance see a struggle ahead.

By JERRY HARKAVY The Associated Press
November 12, 2007

Nowhere in America, it seems, are people more apprehensive
about the prospect of a $3-a-gallon winter than in Maine.

Motorists nationwide may grumble about gasoline prices now
hovering around $3 for a gallon of regular, but home heating oil
that soared this month to $3.09 a gallon -- breaking the $3
barrier for the first time -- is the focus of concern in Maine.

The reasons for Maine's vulnerability are clear:

-- It tops the list of states most dependent on oil heat, with 80
percent of homes relying on No. 2 oil or kerosene.

-- It's one of the nation's coldest states, with the northern city
of Caribou often singled out by the National Weather Service as
having the lowest temperature among the Lower 48.

-- In terms of per capita income, Maine is generally ranked as
the poorest state in the Northeast.

-- And lots of older homes lack adequate insulation, making
them harder to heat.

So as heating oil prices hit record levels and the sound of oil
furnaces kicking in becomes more frequent, plenty of people are
worrying about whether they'll be able to scrape up enough
money to keep warm.

"It's not just low-income people who are fearful. It's the working
couple or families who are now going to have to choose between
heating, literally eating, and of course driving," said John Kerry,
director of the state Office of Energy Independence and Security.

For families struggling from paycheck to paycheck, the cost of
filling a 275-gallon tank can easily blow a hole in the budget.

In Bath, Stacy Crowell, a 29-year-old mother of two whose
husband works at Bath Iron Works, turns down the thermostat,
puts plastic sheeting on windows to keep out the cold and
compares prices at local oil dealers before filling the tank.

The family, which burns 800 to 1,000 gallons of fuel a year,
does not qualify for government assistance.

"Our incomes are just over the limit, so we can't get help for
anything. Every program we try for, we're just over it," she said.

With the recent spike in prices, Crowell is wondering how long
the family can afford to remain in the drafty old farmhouse that
they bought five years ago, when heating oil was much cheaper.

"We're thinking about selling in the spring because it takes so
much to heat this place," she said. "We can't afford it."

The state, meanwhile, is planning for a worst-case scenario.

Gov. John Baldacci is prepared to convene an emergency task
force in the event that fuel supplies are disrupted and shelters
are needed to accommodate those who have run out of fuel. In
the meantime, officials are pressing Congress for more money
for needy households and are looking to respond to any signs of
price-gouging.

"There's a lot of fear out there," said Judy Frost, who directs the
Low Income Home Energy Assistance Program for needy
residents in Franklin County. "Everyone's afraid to speculate
about what the prices will be in January and February, when the
really cold temperatures set in."

Although many recipients of federal LIHEAP money are elderly
and on fixed incomes, Frost and others who administer the
program are seeing an increasing number of applications from
the younger working poor who may not quality for benefits
under eligibility guidelines.

"We're finding more and more people applying who are over
income because they're so afraid that they're not going to be
able to make ends meet and pay for oil this winter," said Eleanor
West, LIHEAP director for Hancock and Washington counties.

The surge in prices has been dramatic.

The state energy office, which conducts a weekly price survey
during the heating season, said its latest average price of $3.09
was up 23 cents in just one week and was 89 cents a gallon
higher than a year ago. Nationally, the average price was $3.11,
according to the Energy Information Administration.

About 8.1 million of the nation's 107 million households use
heating oil, most of them in the Northeast. On average, Maine
homes burn roughly 850 gallons a year, a cost of more than
$2,600 at current prices.

The higher prices for kerosene, which averages $3.40 a gallon,
hit hardest at many of Maine's poorest households. People in
mobile homes, many in economically depressed rural areas, are
forced to burn kerosene because the less expensive No. 2 oil is
subject to gelling in outdoor tanks when the weather turns cold.

In recent years, many Mainers have insulated themselves against
price increases by either pre-buying their fuel supply before the
start of winter or signing up for a plan that sets a cap on the
per-gallon price.

Last season, however, prices fell as the winter wore on, leaving
those who opted for a price-protection plan paying more than
the cash price. Even though the plans have been a good bet in
most years, last season's experience prompted many customers
to forgo them this time when they might have been able to lock
in their costs at around $2.50.

"What we hear from dealers is that they're down 50 percent. Half
the people probably didn't participate compared to last year,"
said Jamie Py, president of the Maine Oil Dealers Association.

Which is the better deal remains to be seen, Py said. Although
prices are high now, they could drop if the winter is mild.

Despite the sharp rise in prices, Py is confident that everyone
will make it through the winter, even though the state's economy
is sure to take a hit as higher expenditures on heating fuel leave
consumers with less to spend on everything else.

"You have a whole network of social services, churches, state
entities that are out there to help folks get through," he said.
"Nobody's going cold. Everybody gets through the winter
somehow in Maine. It's always been that way."

The dealers association blames excessive speculation and
manipulation in the oil futures market for artificially inflating
prices, and Py suggests that prices could now be at their peak.
But like everyone else, he can't say for sure which direction
prices will move this winter and at what point the system might
crack.

"If we start seeing prices reaching $4 or $5 a gallon, which I
don't anticipate, that would require some sort of government
intervention to make sure that people don't go cold," he said.

Copyright © 2007 Blethen Maine Newspapers