Fuel oil prices start to edge up amid mild weather, continuing pandemic
After a summer of welcomed price declines, heating oil prices on Long Island have crept toward a seven-month high even amid mild weather and a continuing pandemic.
The average credit price for No. 2 fuel oil on Long Island was $2.68 a gallon for the period ending Nov. 30, the highest since April 13, when prices began a precipitous COVID-inspired drop from $2.77 a gallon, according to a state database. Prices went up 5% during November alone.
But even with the recent increases, the current price is 21% below 2019 highs.
Through most of the summer, Long Island heating oil prices stayed well below $2.60 a gallon, often 20%-25% below last year's prices, even hitting an annual low of $2.43 a gallon in April. Average Long Island prices in 2019 never dipped below $3.27 a gallon and often stayed closer to the high of $3.43 a gallon, according to the figures from the New York State Energy Research and Development Authority, which surveys hundreds of oil suppliers every two weeks and posts the results. Just over half of Long Island homes heat with fuel oil.
Local suppliers and experts say factors including expectations for a colder January-February period could be pushing prices up, even though the late-fall heating season is expected to continue to be mild.
Temporary shifts in the economy could also be driving prices up.
Nick Del Vecchio, president of Frank Bros., a heating oil company in Bay Shore, said the prospect of an improving economy with COVID vaccines on the horizon could be contributing to the inching up of oil prices. "As the economy comes back, prices seem to be heading a little higher," he said. "I don’t think they’re going to be where they were a year ago. I don’t see much weather that would be driving it."
Rocco Lacertosa, chief executive of the New York State Energy Coalition, which represents fuel oil sellers from Montauk to Manhattan, said inventories of fuel oil are in good enough shape that even a cold snap may not have the impact on pricing that it has in the past. "From where I’m sitting inventories are looking pretty good," he said. "I don’t see anything of any great concern for a spike at this point."
Local customers say they're beginning to feel the pinch.
"Our price rose tremendously in just five months," said Farmingdale resident Debora Toth, noting an increase to $2.99 on a recent purchase, from $2.34 during the summer.
Toth said when she called to challenge the price, the company, which she requested not be named, told her that increased costs such as COVID-19 protections for workers, new parts for trucks and other expenses have pushed up prices. Her husband called for the price several days later and found it had fallen to $2.84. The Toths have a service contract that’s built into the cost, and recently had their oil tank replaced.
"It’s always been a problem for the consumer" to navigate oil prices, Toth said, whether by shopping around, delaying purchases or deciding whether to lock in rates. The oil companies "aren’t regulated. Prices can be something one day, then 15 cents lower a few days later."
Consumer watchdog groups such as the Public Utility Law Project recommend that customers consider capped oil purchase programs from fuel suppliers, because they limit the per-gallon price for a year, but can take advantage of lower prices if the market declines. Lock-in programs hold the rate at a set price.
The Nov. 30 price of $2.68 is a 21.3% decline from the average $3.41 Long Islanders paid in 2019. The percentage decline has been consistent for most of the year, following sharp crude oil market price declines in the wake of pandemic-led lockdowns and swelling inventories.
Long Island’s oil prices are already among the highest in the state. The only region that’s higher right now is Western New York, including the Buffalo area, where oil sells for an average $2.65 a gallon. It’s as low as $2.15 a gallon in the Albany area.
The local increase in fuel prices comes as a federal agency predicts overall lower heating oil costs this winter.
The U.S. Energy Information Administration in October issued a report saying it expected winter heating costs for fuel oil customers to decline this year and next.
"We expect households that use heating oil as their primary space heating fuel will spend 10% less this winter than last, as lower crude oil prices and abundant fuel supplies drive retail heating-oil prices down, and offset colder winter temperatures," EIA administrator Linda Capuano said in a report. Nationally, average heating oil prices are projected to be $2.35 a gallon this winter; the current average is $2.208 a gallon. EIA spokesman Chris Higginbotham said prices could be higher in certain regions "reflecting higher logistical costs and various other challenges faced by retailers."
Meanwhile, the EIA said it expects natural gas based winter heating bills to rise this winter compared with last winter's, even though EIA projected the cost of gas itself to decline due to greater inventories. The reason, according to the EIA projection: cooler weather could increase overall usage of gas, more than offsetting the expected price declines.
National Grid, which supplies natural gas to some 600,000 Long Islanders, said the company didn't release an expected winter heating cost forecast this year, though a forecast could come this week.
The price of propane, meanwhile, reached $3.12 a gallon on Long Island last week, following a steady increase from a year-to-date low of $2.97 a gallon on May 11.
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Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.
