Some fear being left inside in the cold

High crude oil prices that had nearly everyone cringing at the gas pump this summer now have heating oil customers gulping as the cold months approach.

The state's Sept. 1 price survey of full-service oil dealers found that the average price of heating oil, $1.65 a gallon, was 42 cents higher than at the same time last year and 4 cents above the highest average price reached in all of 2003. And winter is still months away.

That has many area residents, in particular seniors on fixed incomes, worried about how much they'll be paying this season to keep their houses warm.

''They're all talking about it up here," said 81-year-old John Kalagian of Marlborough, explaining how oil prices have been a hot topic at the city's Council on Aging.

Kalagian said he uses about 1,000 gallons of oil each year to heat his 170-year-old home. He recently locked in a price with his oil dealer at $1.69 -- 40 cents higher than his lock-in price last year. That difference will cost him nearly $400.

''I think my water bill has just about doubled, my taxes have gone up over $500, gas heating for my water tank and stove have gone up, and naturally, gasoline to run the car has gone up, and we don't get that much for a raise in Social Security," Kalagian said.

Janice Long, the outreach coordinator for the Marlborough Council on Aging, said Kalagian's lament is a familiar one.

''Home heating oil, prescription drug costs, Medicare . . . they're very concerned. They're always getting hit in the pocketbook," she said.

In Massachusetts, 40 percent of homes are heated by oil, while 42 percent use natural gas. The remainder use electricity, propane, or wood.

Despite a recent dip in prices, as of earlier this week, crude oil prices remained high, hovering near the $44 per barrel mark; that's down from a peak of $49 per barrel in late August. A year ago, crude oil was trading at about $30 per barrel.

Oil dealers are shrugging their shoulders when customers ask if they should lock in at current prices.

Arthur Chaves, treasurer of Coan Oil in Natick, said many customers have expressed interest in locking into prices this year.

''We have no idea where prices are going, and I honestly don't know what to tell people," he said. ''We're the tail end of the dog here in terms of oil prices. It's just an unknown."

That's been the dilemma for oil dealers this year, according to Michael Ferrante, president of the Massachusetts Oilheat Council in Wellesley Hills.

''Heating oil dealers generally buy their product in the May, June, July time frame, but with the market being so volatile, they were reluctant to enter into contracts with their suppliers," he said.

As a result, many dealers waited and watched as prices ticked upwards daily.

''What happened with us is we waited, and waited, and waited, and the prices never went down," said John Jette, co-owner of Benny's Oil Service in Franklin.

Of Benny's 1,600 customers, Jette said nearly 80 percent lock in with either a fixed-cap price -- meaning a ceiling is placed on the per-gallon cost -- or a prebuy program, where customers purchase oil for the year at current market prices.

Benny's cap plan is $1.69 a gallon for customers within Franklin, and they offer a 10 cent discount for customers who pay early. They also offered a prebuy program for $1.44 a gallon, but that is now closed.

But David L. O'Connor, commissioner of the Massachusetts Division of Energy Resources, said that if anything, he sees crude oil prices heading lower.

''My only feeling is, this is a risky time to be locking into a set price. I think prices are quite high now," he said.

A big factor, O'Connor said, is inventory.

''One of the things we watch is the inventories of product, and we have pretty good inventories -- meaning wholesale dealers are bringing it in at a good pace and stocking up for winter -- so that's a good sign," he said. ''If we were seeing low inventories, I'd suggest people lock in and avoid price spikes, but that's not what we've got now."

But what kind of winter the region sees this year could also send prices higher or lower -- up if it's cold and demand is high, down if it's mild and less oil is needed.

''The big variable is the winter weather -- that's the truism. You can't predict the weather, but as the weather goes, so does the heating oil prices," O'Connor said.

And oil-heat customers shouldn't necessarily be envious of their neighbors who use natural gas: They are expected to see significantly higher prices this winter as well, though winter gas rates are not released until November.

''Natural gas prices are significantly higher than oil and are going to stay that way, we think," O'Connor said.

Michael Durand, spokesman for NStar, which serves 51 communities, including Newton, Natick, Framingham, and several other cities and towns in the region, said the utility is working on winter gas rates but that it was too soon to speculate on what they would be.

Both gas and heating oil dealers say conservation techniques can significantly lower energy costs.

Measures such as lowering the thermostat, maintaining heating equipment, installing weather stripping, and putting in storm windows can make a big difference.

''The more expensive the energy is, the more payback is if you institute some energy efficiency," O'Connor said.

High energy prices could mean that more people like Kalagian will be turning to fuel assistance programs, in which eligible residents can get financial help in paying their bills.

David Harrison, director of fuel-assistance programs for the South Middlesex Opportunity Council, a Framingham-based social service agency, said he anticipates that oil prices will force more people to seek help.

''Our numbers were up last year from the previous year by 200 applications and will probably be up this year," he said. ''It could be another 200 this year."

Harrison said the agency expects to see more seniors among that group.

But funding is always a question in an election year, he said. Last year, the agency's fuel assistance budget, which comes largely from the federal government, was $2.1 million, an 11 percent cut over the previous year. Harrison said he should know what this year's budget will be in the next few weeks.

Long said she starts advertising fuel assistance options and guidelines in the Marlborough Council on Aging's newsletter in early October.

''If they can qualify for fuel assistance, they really need to look at that," she said. ''I've had people get $400 to $600 for the season, and that's substantial."