Heating oil price sets state record
But $3.05 average will drop soon, one Mass. dealer predicts
The average price of heating oil in Massachusetts jumped 14 cents a gallon in the last week, rising to a record $3.05 a gallon, according to a state survey released yesterday.
This week, a Division of Energy Resources survey of full-service dealers found prices ranging from $2.80 a gallon to $3.30 a gallon.
The average price per gallon was 70 cents, or 30 percent, higher than it was last year at this time. That means someone filling a 250-gallon heating oil tank at the average statewide price would pay $763, or $175 more than a year ago.
"There's no fundamental reason why heating oil prices are going up like this," said Jim Horan, the owner of Horan Oil in Stoughton. "What's happening is institutional investors are buying oil as an inflation hedge and pushing the price up."
Horan said customers are lucky the dramatic run-up in heating oil prices is happening now, when the weather is relatively warm, and not in February. He predicted that oil and heating oil prices will fall - and fall quickly - at some point. "We know it's going to happen. We just don't know when."
His advice to customers: "Don't panic. It's probably going to be only one delivery at this price level."
Approximately 60 percent of the price of heating oil is dictated by the price of oil, which has been rising rapidly and is closing in on $100 a barrel. Yesterday, oil for December delivery on the New York Mercantile Exchange rose $2.72, to $96.70 a barrel.
The wholesale price of heating oil for December delivery rose 6.39 cents, to $2.61 a gallon.
Retail heating oil prices are generally 50 to 60 cents a gallon more than the wholesale price. Horan said his price yesterday was $3.19 a gallon, a record for him.
Consumers are also facing higher prices at the gasoline pumps. The American Automobile Association reported that the average pump price for regular gasoline was $3.02 a gallon. In Boston, according to the AAA, the average price was $2.91.
The wholesale price of gasoline for December delivery rose 5.39 cents yesterday, to $2.44 a gallon.
Although the rising price of heating oil is raising concerns about the ability of homeowners to heat their homes this winter, heating oil purchases, on average, represent a small portion of the typical household's expenditures.
According to 2005 data from the US Bureau of Labor Statistics, a household in the Northeast spent 0.8 percent of its annual expenditures of $47,921 on fuel oil and other fuels. The typical household spent the same amount on pets, toys, hobbies, and playground equipment.
Bruce Mohl can be reached at mohl@globe.com.
