Business heats up in the cold

Midwinter: The Baltimore area is much colder than normal, which is good for travel agents and insulating services.

February 04, 2004|By Lorraine Mirabella and Jamie Smith Hopkins | Lorraine Mirabella and Jamie Smith Hopkins,SUN STAFF

A bitter cold winter has some people shivering as they cope with higher fuel costs, but it's paying off for others, from home insulators to taxi drivers to travel agents offering escapes to warm and sunny climes.

Both natural gas and fuel oil prices are marching steadily higher, with wholesale natural gas up 25 percent from last year and crude oil inventories at their lowest levels since the 1970s - a combination that has made the past month more expensive for home heating than even last year's chilly January.

BGE estimates homeowners have already paid an extra $20 on average for natural gas heat in January, and heating oil prices crept up more than 10 cents a gallon last week compared with the same week in January a year ago.

"Even under normal conditions, January is your coldest month," said Laurie Duhan, BGE's director of gas pricing and tariffs.

And the past month was far from normal - it has been 17 percent colder. "That's very cold," she said.

But for Shaun Welsh, who sells cords and half-cords of oak wood at Blue Moon Farm in Randallstown, cold is good. Sales have increased as temperatures have dropped and homeowners are burning firewood to keep gas bills down, said Welsh, the office manager.

"It's a cheaper source of heat," he said.

At the Electric Beach Tanning Salon in Odenton, the tanning beds have been filling up, especially on snow days, said Jennifer Hawk, a front-desk employee.

And Roland Park Travel in Baltimore and Bennett World Travel in Ellicott City are getting calls daily from people desperate to escape to somewhere warm - and soon, said Kevin Abell, owner of the travel agencies. Florida, Costa Rica and Jamaica are particularly popular.

"The colder, the better - for us," he said. "Everybody else is complaining about heating bills, and people are saying, `Get us out of Dodge.'

"We're significantly stronger than we've been in the last three years," Abell said. "Part of it is because the economy is turning around - part of it is because the weather is just dreadful. People are getting cabin fever. Maybe it's just because it's been unrelenting. That's really what's getting people down."

At AAA Mid-Atlantic, travel bookings for Maryland and Delaware are up about 10 percent compared with last January, said Suzette A. Palmisano, general manager for the central region. People are looking for cruises and direct flights to the Caribbean, among other places.

"They're wanting to find a good deal somewhere warm," she said. "I don't blame them."

Extra-low temperatures also have meant a bonus season for some home insulators. Baltimore Aluminum Inc., a Towson-based window replacement business, is getting more calls than usual from people wanting to replace drafty, older windows, said Hillard Folus, owner.

After the typically busy fall season, "we've just stayed busy, instead of slacking off," he said. "People become more conscious of their windows when the weather becomes cold like this. Most people call because they're concerned about high fuel bills."

The average BGE customer saw higher-than-average bills in January, thanks to heavy use and a 36 percent increase in the retail price of natural gas. Gas heat use was up 13 percent in January compared with a normal January, with the average residential heating customer using 167 therms rather than the month's more typical 147 therms, Duhan said. Customers are paying, on average, $180 a month for gas heat.

Duhan noted that customers actually used less heat this January compared with last January, possibly because many people, aware that prices have risen, are dialing back the thermostat.

"This year people were being a little more conservative at the beginning of the month," she said. "There may be more active conservation - keeping the house a little colder."

Oil heat customers are paying higher prices as well, as crude oil prices have risen from about $28 per barrel in early December to more than $34 yesterday. Consumers paid an average $1.62 cents per gallon for heating oil as of Jan. 26, compared with $1.49 per gallon at the end of January 2003, according to the Energy Information Administration.

Prices have risen as demand worldwide has increased and inventories have remained tight. Crude oil stocks are at among the lowest levels since the 1970s, said Ron Planting, an analyst with the American Petroleum Institute, in part because the higher crude prices make it a more expensive proposition for oil companies and refiners to hold large inventories, he said.

"So that puts pressure on crude oil prices," said Rayola Dougher, senior policy analyst with the American Petroleum Institute.

"That's at the base of what we're seeing, and we're having a colder than normal winter."

High prices or not, the cold means people are burning more oil, and that has meant more business for fuel oil companies such as Hein Bros. Inc.

"We're twice as busy," said Carl Hein Jr., an owner. "Customers are calling us because the other companies can't get to them. We're trying to help everyone out."

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