Gloucester County Times

Buyers' Minds Turn To Heat Oil

Gloucester County Times — Tuesday, July 22, 2008

By Pete McCarthy

With temperatures in the 90s, the last thing on the minds of many homeowners is heating oil.

But, the way the market keeps fluctuating, there are some who say that buying a winter's supply of fuel oil right now might not be a bad idea.

"If it were my house, I would top off my tank right now and know I have a full supply of oil going into the season," said Don Steward Jr., owner of heating contractors W.B. Steward and Son in Woodbury Heights.

On Monday, Steward was charging $4.59 a gallon for heating oil a 37 cent decrease from two weeks earlier.

That price, however, is up $1.66 from a year ago.

The average fill is about 200 gallons, Steward said.

At current prices, it would cost $918. Two weeks ago, the same amount of oil would have cost an extra $74.

Steward offers his customers the opportunity to top off their tanks now, rather than wait until later in the year.

"The price is coming down now," he said. "Is it going to go up? We don't know. Having a full tank going into winter, you can be assured you're ready to go."

Making the decision on when to buy oil is not easy, said Dr. John Worrall, a professor of economics at Rutgers University in Camden.

"People are caught between a rock and a hard place because they are trying to forecast what is going to happen to the price of crude oil," Worrall said. "You are protecting yourself against an upside risk, but you are also forgoing opportunities if the price falls."

Consumers need to figure out what they can afford and go from there, he said.

If someone is uncomfortable with the idea of paying more than $5 per gallon, then locking into a price right now makes sense, according to Worrall.

"It's a gamble," he said.

The fluctuation can be attributed to the continued oil speculation taking place on Wall Street, experts say.

"It's just outrageous how much the price has increased," said Wende Nachman, oil group director for New Jersey Citizen Action Oil Group. "Most of the reason for that is speculation – there is no other excuse. Supply and demand (ratio) has not doubled in a year."

Nachman said there is federal legislation pending that would put a stop to the practice of speculation in crude oil, which would in turn lead to a drop in the price.

Nachman's organization, which has an office in Camden, offers lower rates to members. Those who buy into the program there is an annual $30 membership fee can get lower rates for their home heating oil. For example, Monday's rate was about $4.30 a gallon, Nachman said.

No matter how you get your fuel, Nachman suggested that consumers utilize a budget plan, which spreads the cost into monthly payments.

In Woodbury Heights, Steward said some people are upgrading their heating systems, hoping that the change will be cost efficient.

There will be even more drastic changes if the prices stay as high as they are, according to Worralll, the Rutgers economist.

"People are going to start economizing on home heating fuel," said Worrall. "They will also have to cut back in other areas because they'll have to heat their homes."

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