WASHINGTON – Heating oil prices in Maryland have jumped almost 72 percent since December, forcing some low-income households to choose between food, medicine and heating their homes, in the words of one lawmaker.
Distributors in the state said that “substantial reductions” are on the horizon for oil costs that reached as high as $1.70 a gallon Thursday, compared to 94 cents a gallon at the same time last year.
But they cannot promise how long the lower rates will last in what has been described as an “hour-to-hour market.”
“We’ve seen the [wholesale] price go up two or three times a day,” said Andrew Joseph O’Brien of the Maryland Energy Assistance Program, which provides fuel funding assistance for eligible residents. “It’s like a surprise … they [prices] usually peak around the second week of January, and then decline.
“We see that low-income families are at a loss for what to do, because the price can go up within an hour,” O’Brien said. “For families who are barely making ends meet, this can be scary.”
Homeowners who order fuel in the summer can lock in lower prices, but those who have had to buy on short notice have been paying record high prices since the New Year.
Most local distributors are like Burchoil, a Southern Maryland and Washington-area distributor that saw prices go from $1 per gallon of heating oil in December to $1.70 per gallon on Thursday, said Treasurer James Daugherty. This time last winter, heating oil prices were 94 cents per gallon, he said.
Industry and government analysts blame the Organization of Petroleum Exporting Countries for the increases, saying OPEC is limiting oil production to drive up the price of crude oil, which in turn drives up fuel oil costs.
“There’s no doubt, that when OPEC restricts their supplies, it’s going to cause all fuel prices to escalate,” said Doug McMahan of Tri Gas & Oil Inc. in Federalsburg.
But some say the big refineries also have to share some of the blame. Companies such as Exxon and Amoco underestimated how much oil they would need this winter, especially for Northeastern states, and did not import enough, said John Hartline, marketing vice-president at Besche Oil in Southern Maryland.
“They got caught short,” he said. Before this winter, “we had three really mild winters in a row,” he said.
When customers see the frequent mark-ups “they go ballistic,” said a representative at Tri Gas & Oil, who would not give her name.
“[Customers] are upset, they don’t understand it,” said Burchoil President Elliot Burch Jr. “Unfortunately, they think that it’s us but it really isn’t.”
Burch estimated that most homes use 600 to 1,000 gallons of fuel per year, primarily in the winter. So, customers who filled their home tanks in early February may have paid as much as $1,700 dollars in heating costs, compared to $990 last year.
The unexpected rise in heating costs is sucking cash out of the pockets of many Marylanders, and the news of price decreases may not be enough to comfort those who are being hit the hardest and have the least to spare.
“Many of our seniors were trying to decide if they would buy medicine or food. Now, they are trying to figure out if they want to buy medicine, food, or heat their homes,” said Rep. Roscoe Bartlett, R-Frederick.
Many of the elderly, especially in rural areas, are suffering because the oldest houses are usually heated with oil, he said.
Hartline said “substantial reductions” in oil costs are expected to reach Maryland within the next two to three weeks.
“We’ve already gotten notice from some of the people that supply oil that the prices are going to be lower tomorrow than they are today,” he said Friday.
But McMahan, who said his company also has seen a drop in prices in the past few days, said there is no guarantee the lower prices will last.
“Another round of cold weather could push the price back up to where it was before,” he said.