ANNAPOLIS – Maryland’s average price for a gallon of gas has dropped below pre-Katrina levels, but the cost of heating homes this winter is still a concern because oil and natural gas prices have not declined as quickly, industry officials told lawmakers Tuesday.
“I don’t know how or when the prices will come down and level out,” said Rayola Dougher, spokeswoman for the American Petroleum Institute. “Perhaps when production comes back, we could see prices go down then, but a lot will depend on winter weather.”
About 19 percent of the United States’ oil production ability remains shut down as a result of hurricanes Katrina and Rita, she said, and 11 percent of natural gas production and 17 percent of U.S. refining capacity is closed.
Gas prices in Maryland have dropped about 80 cents from a high of $3.27 on Sept. 6, to $2.44 on Nov. 1, according to AAA Mid-Atlantic.
Imports supplementing U.S. supplies are largely responsible for the drop in gasoline prices, said Dougher.
But the United States is not able to import large supplies of natural gas, which is commonly used for home heating.
The supply is tight, and the cost of fuel has remained high since the hurricanes disrupted production in the Gulf region, Dougher said.
As a result, the U.S. Department of Energy has predicted that home heating costs in Maryland will be about one-third higher than last winter, she said.
Mary Lou Kueffer, director of the state’s Energy Assistance Program, said the high fuel prices mean the need for assistance with heating bills this winter will be much higher.
Last winter, about 96,000 residents applied for assistance with home heating bills from Maryland’s Energy Assistance Program. This year, she expects that number to top 100,000.
“We expect to have a significant number of applicants coming in this year who had enough money to pay their bills last year,” she said. “But it’s hard to project the numbers, since we don’t know what prices will be six months from now.”
Applications already are up 10 percent compared with last year, Kueffer said.
About 50 percent of the state’s homes use natural gas for home heating, contributing to the increases, Dougher said.
Meanwhile, a gallon of heating oil in Maryland is no bargain at $2.62, up 56 cents from a year ago, according to the Energy Information Administration.
For heating oil prices to decline, the United States will need a surge in production, Dougher said.
“The supplies are still not back to where they have been,” she said. “Supplies are tight, and it is hard to find imports.”
Kueffer said she is expects her budget to remain about the same as last year at $34 million, and she has not yet heard of any additional funding from the federal government or the state. “Congress is debating on what the federal funds will be this year,” she said.
To handle the increased enrollment, Kueffer said the Energy Assistance Program will need to shift people into different categories so that those who require the most immediate assistance will be given priority.
Sen. Thomas M. Middleton, D-Charles, said he is concerned about the program because he has already received calls from constituents worried they may not be able to afford their bills this year.
Sen. J. Robert Hooper, R-Harford, said he thinks the Energy Assistance Program will need more money and should request assistance now from the state.
“If we wait,” he said, “we can’t get the wheels of government moving fast enough to do people any good.”