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Heating oil analysts see normal price levels

A forecast of bitter cold on the heels of last week's Arctic temperatures has experts keeping close watch on heating oil prices, which are about 8.5 percent higher in Massachusetts than at this time last winter.

High crude oil prices have combined with the cold weather to boost prices, though they are not much higher than normal for this time of year, according to Michael Ferrante of the Massachusetts Oil Heat Council, a trade organization.

Ferrante predicted normal price levels for the coming months, citing healthy oil inventories and indications that the weather may, on balance, be warmer than last year.

But uncertainty comes with the unpredictable New England winter.

"The question is the [winter's] duration," said Jack Sullivan, chief executive of the New England Fuel Institute. "Last winter never seemed to end."

The average price per gallon in Massachusetts was $1.54 for the week ending yesterday, according to the Massachusetts Division of Energy Resources. Last year at this time, the price was $1.42 per gallon. It was $1.15 during an unusually warm winter in 2002 and $1.51 in 2001.

This week's freeze is bad timing for thousands in the Boston area who've already used their federal fuel assistance allotment for the season, said John Drew, executive vice president of Action for Boston Community Development, which administers federal fuel assistance in Boston, Brookline, and Newton.

"The next couple days are just going to be brutal," he said.

According to the National Weather Service, temperatures will drop to single digits today and stay below the teens until Saturday, falling as low as minus 6. Wind chills between minus 15 and minus 30 are forecast.

Even so, Ferrante said industry measures of expected heat consumption indicate the winter has been warmer than average, and warmer weather is expected by week's end.

It's impossible to predict how any short-term cold snap will affect long-term prices because sustained demand is what drives up prices, Sullivan said. He added that conservation, including simple steps such as weather-stripping, should be emphasized to curb consumption and keep prices down.

The high price of oil, which briefly hit $35.20 a barrel yesterday before settling at $34.43 for February futures, is elevating all fuel prices. Meanwhile, the high demand for heating oil is increasing gasoline costs because refineries are focusing less on producing gasoline, said Art Kinsman, a spokesman for AAA Southern New England. The state's average gasoline price per gallon rose from $1.52 to $1.57 last week. Tom Kloza, chief oil analyst at the Oil Price Information Service, a Lakewood, N.J., publisher of industry data, said natural gas supplies can affect heating oil costs in cold weather because gas suppliers sometimes cut off certain commercial users when they fear they can't meet residential demands. Those commercial users turn to oil companies, causing a spike in demand and price increases of as much as 20 cents a week.

Lola Perry, a Boston resident, said she's barely hanging on at current prices. The 49-year-old has cancer and can't work, making it impossible to afford heat at her drafty two-family house. She's long used up the roughly $370 in federal fuel assistance she received through ABCD for this winter and is looking to the coming cold with dread. Her family will help, but it likely won't be enough, she said.

"It makes you wonder if they care or not," Perry said. "The politicians, the people, everybody."

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