Zooming fuel prices too costly for many

Chill: Evidence mounts that higher fuel prices are hurting low-income families.

February 14, 2003|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

It's only February, and Xavier Reed has already racked up $8,000 in unpaid heating bills.

Except, the debt isn't his. It's his customers'.

As winter temperatures keep dropping and fuel prices continue rising, the owner of Can-Do Fuel Oil Co. in West Baltimore sees no choice. Either give his longtime customers a temporary pass on paying for the heating oil they need to warm their homes this season, or leave hundreds of them in the cold.

He's willing to take the risk.

"Most of my customers are on the low-income side," said Reed, the second-generation owner of the family-run business on Baker Street.

"These are people who have been buying oil from me for years. They have to have oil. They have to have heat. Most of them have overspent their winter fuel budget. Do I turn them away? The situation is that people are going to be priced out of keeping warm."

Across the state and country, colder weather, higher demand, low inventories and uncertainty over major overseas oil suppliers have combined forces this year to hit people hard at home and at the gas pump.

Over the next several months, experts say, Marylanders and their neighbors should brace for increasingly volatile fuel prices as threats of war in the Middle East and the strike in Venezuela continue to cause sharp spikes in the price of oil.

The price of light sweet crude rose to a 26-month high yesterday on the New York Mercantile Exchange, reaching $36.40 per barrel.

The average retail price for regular gasoline rose for the ninth week in a row to a little over $1.60 per gallon, the highest price since June 2001, according to the U.S. Energy Information Administration.

Natural gas

Natural gas prices are creeping up as well. Although oil and natural gas markets are separate, the prices for the two tend to move together because they compete in the industrial and power generation sector, according to the Natural Gas Supply Association.

In this region, Baltimore Gas and Electric Co. is projecting a 30 percent to 40 percent increase in residential customers' heating bills for the entire winter. That translates to an additional $140 to $150 per customer for the entire heating season from November to March.

Few are blaming price gouging on this season's misery, unlike two years ago when energy companies were accused of taking advantage of the power crisis in the West. Instead, experts say you can blame the poor economy and current events.

"It's really a sticker shock for customers," said John C. Felmy, the chief economist for the American Petroleum Institute. "It depends on three factors. What happens with Venezuela? What happens with Iraq? What happens with the weather? The prices could get better. They could get worse. It's anybody's guess."

All it means is that to cut down on fuel costs this winter, people will have to turn the thermostat down a notch or two, put on a sweater, throw a couple of more blankets on at night and maybe fill up the car with regular instead of premium gasoline.

For Janette Penn, it meant loading up her Toyota Camry with Amoco's $1.69 per gallon mid-grade gas instead of premium, which was selling for $1.73 at the Orleans Street station.

It's only a 4-cent difference, but every little bit counts, especially since the heating bill for her Northeast Baltimore apartment shot up 47 percent last month.

"It used to cost me $13 to fill up my car, now it's $20," said Penn, 43, an insurance claims processor who also holds a part-time catering job.

"My natural gas bill used to be $75. Now it's $110. I'm single. I work two jobs just to get ahead. Now, I'm just trying to maintain.

"What can you do? You have to get to and from. You have to have heat. There's no way around it."

That's exactly what advocates for the poor are worried about. Although heating bills haven't soared the way they did in 2001 when natural gas prices doubled and tripled, groups such as the Fuel Fund of Maryland are concerned that large-scale utility service terminations could come in the spring if low-income customers can't pay their winter heating bills.

And high prices aren't just hurting the poor, said executive director Mary Ellen Vanni. They are also taking a toll on middle-income families that usually donate to the fuel fund.

"Some people have already called us this year and said they can't give to us because the cost of their own fuel bill has increased," Vanni said.

"We've also got families coming back for help a second time, and that does make it difficult because it's supposed to be a one-time grant. But people are finding themselves in extreme need.

"We're worried that a lot of these people could get shut off by spring time."

State energy agencies have also been hitting the streets since November to urge low-income residents to apply for assistance.

$55 million in aid

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