Retail heating oil prices have risen to more than $4.50 a gallon, nearly double what they were last year at this time. Some oil dealers have delayed rolling out their payment plans for next winter as the world oil markets continue their wild ride.
Consumers - already on edge with rising gasoline and food prices - will probably be outraged when they calculate their oil bills for next winter, said Jamie Py, president of the Maine Oil Dealers Association.
"There'll be sticker shock," Py said. "Nobody knows what the price will do. It could go up or the bubble could burst and it could come crashing back down."
The angst over heating oil prices is particularly acute in New England, where a higher proportion of people use oil as their primary heating source than any other region, ranging from more than 75 percent in Maine to about 40 percent in Massachusetts. Of the 7.7 million U.S. households that heat with oil, nearly 70 percent reside in the Northeast, according to the U.S. Department of Energy.
William Foss, 61, of Portland, had his heating oil tank topped off Thursday with 115 gallons. At $4.52 a gallon, that ran him about $520 - the most he's ever paid for heating oil. But he didn't want to wait until fall for fear it'll go even higher, to $5 or $6 a gallon.
"If prices still keep going up, they're going to find people frozen to death next winter because they won't have the money to buy oil," Foss said.
Residents who depend on heating oil have started considering their different payment options for this winter - such as fixed-price, capped-price or prepayment plans.
Bangor-based Webber Energy Fuels, which operates across Maine and parts of New Hampshire, has been selling fixed-price programs at $4.70 to $4.80 a gallon for next winter, said President Mike Shea. Last year at this time, the price was $2.50 to $2.60.
In his 32 years in the business, Shea has seen commodity prices rise and fall.
"But it seems there's only one direction in this market - up," Shea said.
Fewer customers are signing up for payment plans, he said. Less than 20 percent of his customer base has signed up for fixed-price plans, down from about half two years ago. Many aren't signing up because they are hoping that prices will drop and market prices will be lower next winter than the fixed prices are now.
In Vermont, many oil dealers have delayed setting up prepurchase contracts because of concerns that prices could plummet, leaving them with expensive inventory they would have to buy at the current high prices, said Matt Cota, executive director of the Vermont Fuel Dealers Association. But it's a gamble.
"We're talking about lots of money at stake," Cota said. "If Goldman Sachs is right and oil goes even higher, $4.75 is a bargain."
The residential price of heating oil rose 59 percent from the first quarter of 2007 to the same period this year, far outpacing the price of other heat sources, according to the Energy Information Administration. During the same time, natural gas and electricity prices both rose about 3 percent.
The government projected this month that heating oil prices will average $3.67 a gallon in 2008, up from $2.72 a gallon last year. Those forecasts are expected to be raised in June.
At today's prices, homeowners nationwide will be shelling out billions of dollars in cash for heating oil - with nothing extra to show for it.
In Maine alone, if the more than 400,000 households that heat with oil pay an extra $1 per gallon for 1,000 gallons a year, which is about average, that adds up to an extra $400 million spent on heating oil.
Those kinds of numbers can end up hurting the economy, as people have less discretionary income left over to spend in restaurants, stores and elsewhere. The high price of oil is one reason why Maine retail sales fell 5 percent in March from a year earlier, said Catherine Reilly, the state's economist.
While people can't control the price of oil, they can try to cut their consumption. Judy Dorsey of Gardiner halved her oil use last year by making improvements to her home, which was built in 1850.
After an energy audit of her house, she used a low-interest loan from the Maine State Housing Authority to have her walls and attic insulated, new windows installed, and cracks and holes filled in her foundation, attic and heat ducts.
She used 350 gallons of heating oil last year, compared with 750 gallons two years ago, saving her hundreds of dollars. She'll save even more this year.
"I picked the right year to do it," Dorsey said.
