Heating oil prices drop just as weather gets cold

December 27, 1990|By Kim Clark

Home heating oil prices are falling just when Marylanders need it most -- just as the first chilly weather of the winter has struck.

A survey of local heating oil dealers yesterday found prices ranging from $1.10 to $1.30 a gallon, down about 10 cents from highs set after the Iraqi invasion of Kuwait in August. And several oil company managers said they expect further price drops in coming weeks.

Nationally, home heating oil was selling at an average of 90 cents a gallon before Iraq took over Kuwaiti oil fields. It peaked at $1.33 a gallon in early October and slipped to $1.28 in early December, according to the Energy Information Administration.

In Maryland, where the agency says home heating oil prices have been slightly higher than the national average, local dealers said prices have dropped an additional 8 cents or so since the last federal survey in early December.

The high this fall almost matched the dramatic peak of $1.34 a gallon recorded in January 1990, which was caused by an unusually cold December and temporary shortages of oil.

Though all involved in the industry say that a war in the Middle East would drive oil prices up sharply, industry experts say the mild weather has resulted in inventory surpluses and lower prices for now.

"There is plenty of oil available," said Lock Wills, president of Southern Maryland Oil Co. in La Plata

Mr. Wills, who is also vice president of a regional oil dealers' trade association called the Better Home Heat Council, said the amount of heating oil sold in the region is down 25 to 35 percent this year because of the warm autumn.

As a result, he said, the industry's heating oil inventories are about 12 percent higher than they were a year ago.

"My expectation is that if the [Middle East] situation does not blow up into a war, prices should come down to normal levels fairly soon," he said.

Rick Phelps, owner of the Carroll Independent Fuel Co. in Baltimore, said his company is charging $1.23 a gallon, down from $1.33 a gallon in September. He said he has been storing more oil than usual this year but that "since yesterday, when it started getting cold, we've gotten busier."

At Catholic Charities Oil, which sells its $1.10-a-gallon oil only to low-income families, the cold weather and lower prices sparked a deluge of calls, said program director Mary D'Ambrogi.

"It is unbelievable today," she said. "I probably have 100 orders, and normal is 25."

She said she expects to drop prices another nickel in the next week or so.

Dave Watkins, who runs Watkins Ice & Fuel Co. in Baltimore, said he plans to drop his price 2 cents, to $1.08 a gallon, today.

"I am cheap" compared with most other dealers, he said.

Mr. Watkins said he is passing on the price cuts he has been getting from wholesalers.

"I'm making my regular profit margin. . . . I am making a pretty good living right now," he said.

Mr. Watkins said he has picked up much unexpected business because customers are shopping carefully for price this year.

"I wasn't planning to work" the day after Christmas, he said, "but I've been out all day" because of calls from people looking for inexpensive oil.

On the New York Mercantile Exchange yesterday, January heating oil gained 2.32 cents, to 81.26 cents a gallon, and January unleaded gasoline futures rose 1.90 cents, to 68.14 cents a gallon.

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