The Star-Ledger

Cold Costs: New Jersey Homeowners Brace For Higher Heating Bills This Winter

The Star-Ledger — Tuesday, August 26, 2008

Star-Ledger Staff

A Vernon father spends his spare time cutting firewood to heat his home this winter. A mother of three in Lawnside hopes to put away enough from her weekly paycheck to buy as much as $300 of heating oil sometime soon. A Branchburg couple expect a new boiler means they won't have to buy as much fuel this year.

Across New Jersey, homeowners coping with record home heating oil prices are trying to figure out how they will make it through the coming winter without busting their budgets.

Many are adapting by changing their behavior, according to oil merchants and customers.

More people are relying on credit cards to pay sky-high heating bills. Some plan to wear an extra sweater around the house this winter. An increasing number of customers are switching to budget plans that spread out the pain of paying heating bills that now run into four digits. Others are checking out the possibility of converting to natural gas.

Portia Simmons, an administrative assistant from Lawnside who struggles to raise three kids on her salary, worries how she will make it through the winter. "It's going to affect us terribly," she said of the high prices. "As it is now, we turn it off when we're not at home and do not run it at night."

Even with the recent fall in crude oil prices, the federal government projects homeowners will pay an average of $4.34 per gallon for heating oil this winter, up more than $1 from what they paid a year ago. In the Northeast, it will cost the typical family $2,725 to heat their home with heating oil this year, a 37 percent jump from the prior year, according to the Energy Information Administration.

"I don't think we've ever seen anything like this before," said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, the state's largest consumer organization. "There are people who are going to have to do without heat or do without buying their children clothes, or what they eat."

The volatility in the oil markets – where prices tumble for a couple of weeks and then shoot upward on reports of supply disruptions – is causing huge uncertainty not only for oil traders, but also for homeowners who rely on heating oil and the dealers who sell it to them.

Many oil dealers are refraining from offering customers lock-in rates, as they have in years past, worried that prices could either fall more dramatically or spike upwards.

"I'm telling my customers, 'Let's get through the hurricane season and the presidential elections and let's see how things settle out,'" said David Neill, owner of M.L. Neill, a family-run dealership in Bernardsville. For the most part, he is not even bothering to buy fuel now, holding off in the event prices drop further.

But he is still plenty occupied. "We're busy with putting in new boilers. My desk is loaded with new estimates because people can save so much" by installing more efficient units, he said. "The higher the price home heating oil goes, the bigger the payback. It's a substantial savings."

Tom Mundy of Branchburg is betting a new boiler will save him money in the long run. When he first built his home 42 years ago, he said it cost him $169 to heat his home at a time when he paid 16.9 cents a gallon for home heating oil. These days, his winter fuel bill tops $4,300. "It has just skyrocketed," Mundy said.

Others are calling it quits on the fuel, like Jeff Radiola of Vernon. "There's no possible way I could afford to pay for oil," said the market manager in the beverage industry. He already has set aside four cords of firewood, about half of what he expects his family will need to get through the winter. He plans to use diesel fuel to run his hot water heater, too.

The record-high prices not only affect customers but also oil dealers. "We have a lot more people on budget plans and paying with credit cards," said Sal Olivo, who owns Blue Ribbon Fuel in Nutley with his brother.

Five years ago, maybe 5 percent of his customers paid their bills with credit cards; today about one-quarter use credit, Olivo said. The same is true with budget plans, with more and more customers switching to a 12-month payment plan so they don't have to swallow the big bill all at one time, he said.

The increased use of credit cards is a huge new cost of business for the dealers, according to Eric DeGesero, executive director of the Fuel Merchants Association of New Jersey. "Historically, it hasn't been a traditional way of paying for home heating oil, unlike the cards people use at gas stations," he said.

More troublesome to some dealers, is the volatility in the marketplace, forcing them to guess at lock-in rates for their customers. Pete Crane of Reel-Strong Fuel in Cranford usually offers customers a lock-in price, but has yet to do so this year because of the uncertainty of which way prices will break.

"It's a pure guessing game," he said. "The Pete Cranes of this world were not supposed to be commodities guys. We're in a no-win situation."

Tancred Lidderdale, an analyst at the Energy Information Administration, would not hazard a prediction as to which way prices will trend, but noted a good rule of thumb is for every $1 drop in the price of crude oil per barrel, home heating oil prices typically dip 2.4 cents. Since early July, crude prices have pulled back from a record above $145 a barrel to yesterday.

Meanwhile, natural gas customers will hardly fare any better this winter, with the four New Jersey gas utilities seeking price increases of 20 percent or more. Still, Public Service Electric & Gas has seen an increase in the number of customers interested in converting to gas, getting about 40 to 50 calls a week during the past three or four months, according to Karen Johnson, a spokeswoman for the utility.

Hal Gelman of Ringwood said he thought about converting to natural gas but decided against it. "Natural gas prices aren't all that much different from what I would have to pay for oil," said the 77-year-old retiree.

Tom Johnson may be reached at or (973) 392-5972.


Nervous about the high price of home heating oil? Here are some energy-saving tips from the U.S. Department of Energy:

Copyright 2008 The Star-Ledger

Top Top | NJCA Homepage | NJCA in the News