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Cost of heating oil to dip this winter

| Monday, Oct. 14, 2013, 10:38 a.m.
Eric Felack | Valley News Dispatch
Glassmere Fuel Service driver Jim Charles delivers fuel oil to a customer on Smail Road in Allegheny Township on Thursday, Oct. 10, 2013.
Eric Felack | Valley News Dispatch
Glassmere Fuel Service driver Jim Charles delivers fuel oil to a customer on Smail Road in Allegheny Township on Thursday, Oct. 10, 2013.
Eric Felack | Valley News Dispatch
Glassmere Fuel Service driver Jim Charles drags the hose and nozzle to deliver fuel oil to a customer on Smail Road in Allegheny Township on Thursday, Oct. 10, 2013.

Having endured dramatic cost increases in recent years, those who warm their homes with heating oil are expected to catch a bit of a break this coming winter.

Not only have prices for heating oil fallen, it's the only home-heating source that is expected to cost less this winter compared with last, according to the U.S. Energy Information Administration's winter fuels outlook.

Higher prices are expected for natural gas, propane and electricity.

Heating oil is used the most in the Northeast, where about 25 percent of households depend on it. Locally, Glassmere Fuel Service President Dell Cromie figures about 15 percent of homes use heating oil.

Heating oil prices reached nearly $4 a gallon a few years ago, driving many homeowners to convert to other fuel sources, said Mike Adams, vice president of Adams Petroleum of Ohio Township.

Heating oil prices are now down to about $3.37 per gallon for a delivery of 150 to 400 gallons — about 20 cents per gallon less than a year ago, Adams said.

Prices are also about 20 cents a gallon lower at Glassmere, where 200 gallons runs $3.39 a gallon.

“Most people who have heating oil have it for a reason,” such as not having access to natural gas, Cromie said.

Adams said some customers who switched from oil to electric went back to oil after getting hit with even higher bills.

But that hasn't been the case in neighborhoods where new pipelines have made natural gas available.

“I doubt I'll ever get those customers back,” he said.

The winter heating season runs from Oct. 1 through March 31.

Temperatures in the Northeast this winter are expected to be about 3 percent colder, according to the Energy Information Administration.

Projected changes in residential spending from last winter are:

• 13 percent higher for homes that heat primarily with natural gas;

• 9 percent higher for propane;

• 2 percent higher for electricity;

• 2 percent lower for heating oil.

Shale gas impact

About half of U.S. households use natural gas as their primary heating fuel.

While natural gas expenditures are expected to be significantly higher than last winter, they are still lower than the average of the previous five winters, according to the Energy Information Administration.

Marcellus shale natural gas has resulted in historically low prices, said Joe Gregorini, vice president of rates and regulatory affairs for Peoples and Peoples TWP.

As of Oct. 1, the companies' quarterly rate was set at $4.32 per 1,000 cubic feet, down from $4.59 in the prior quarter.

The average monthly bill will be $75, up about 6 percent from $71 a year ago.

In October 2008, the price was $11.80 per 1,000 cubic feet, Gregorini said.

“While there's quarterly fluctuations and seasonal changes, there's still relatively speaking a very low price when you consider where prices were in prior years,” Gregorini said.

Natural gas extracted from Marcellus shale has resulted in prices that are more stable and immune to supply disruptions, such as hurricanes in the Gulf of Mexico and other world events. Natural gas prices also no longer track with oil prices, Gregorini said.

Columbia Gas measures natural gas by British Thermal Unit, BTUs or therms, a measure of the value of the heat, spokeswoman Rachel Ford said.

For the fourth quarter, the average residential Columbia customer's bill will be about $85 a month, up about 16 percent from about $73 a year ago, she said.

Prices for the second half of winter, the first quarter of 2014, are not known but expected to remain “low and stable,” she said.

By law, the cost of natural gas is passed on to customers dollar-for-dollar with no markup. Ford said Columbia Gas is working on its infrastructure, spending more than $150 million this year, which impacts rates.

“These investments are required to ensure public safety and reliable service,” she said.

Heating assistance

The federal government shutdown has resulted in the state not knowing how much money will be available this winter for the federally funded Low-Income Home Energy Assistance Program (LIHEAP), said Carey Miller, a spokeswoman with the state Department of Public Welfare.

Miller said the agency expects to know more closer to the program's opening date on Nov. 4.

“At this point we do plan on opening the program,” she said. “We have carryover funds we'll be using from last year. We'll use those first.”

Last year, the state had about $191 million in LIHEAP funds and spent about $163 million, she said. There were about 547,000 applicants for cash assistance, and about 132,000 crisis grants.

Income limits for assistance have increased.

For an individual, the maximum income will be $17,235, up from $16,755; for a family of four, the income limit will be $35,325, up from $34,575.

Miller encouraged those needing help to apply.

“Don't wait until you're in a crisis situation,” she said.

Applications will be available at county assistance offices; online at www.compass.state.pa.us; or by calling 866-857-7095.

Brian C. Rittmeyer is a staff writer for Trib Total Media. He can be reached at 724-226-4701 or brittmeyer@tribweb.com.

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