Consumers Face Problems With Higher Home Heating Oil Prices This Winter
All Headline News ^ | July 18, 2008 | Linda Young

Washington, D.C. (AHN) - Consumers who use heating oil to warm their homes will face higher prices this winter. Although some people are working on ways to deal with the problem, it threatens to impoverish even middle-class American families.

About 8.1 of the 107 million households in the United States rely on heating oil as their main heating fuel, according to the federal Energy Information Administration.

Heating oil prices used to be cheap, but now are around $5 per gallon and expected to go higher. That means that households could face home heating costs of thousands of dollars for the cold season in some of the Northeast that would be unaffordable for many families this winter.

Since residential space heating is the primary use for heating oil, and since demand is, therefore, highly seasonal, there are big price hikes for heating oil from October through March during the nation's cold season.

The EIA notes that most residential heating oil consumers don't have the capacity to store all the heating oil they will use during the cold months, which means they often must order heating oil four or five times during the season. But EIA officials say one thing consumers can do is make sure they fill their tanks during the summer when heating oil prices are low to take advantage of those cost savings for part of their fuel.

Other things that consumers can do is switch to furnaces that use lower priced heating sources, such as electric furnaces, heat pumps, geothermal systems or furnaces that burn pellets made of wood waste products.

The country does have a federal program to help people. But unless the U.S. Congress boosts funding to the Low Income Home Energy Assistance Program, it will likely help fewer people this year than last as heating oil prices continue to rise. The average grant was $359 per year and the program helps only about 17 percent of the nation's poor.

But home heating oil prices are only one of a package of higher energy costs families must cope with.

The National Energy Assistance Directors' Association represents state officials who administer energy relief funds. Its executive director, Mark Wolfe, says it isn't just home heating costs that are crimping budgets for families in New England, but that those costs would add to the rising tab of energy costs meaning that some families there, who are already having trouble making ends meet, could face costs of around $1,600 to $1,700 a month next winter to cover heating oil, electricity and gasoline costs.

"I don't see any way to make the numbers work for middle-income people," Wolfe told The Wall Street Journal.

"They're already shopping at Wal-Mart and eating out less. They'll have to cut back everything that makes them middle class. At some point, you're poor," he said.