Consumers Plan Ahead for Heating Oil
Wednesday, July 26th 2000, 12:00 am
By: News On 6
BOSTON (AP) â€” Winter is still months away. But memories of last year's sharp spikes in heating oil prices gave consumers enough of a chill that they're already planning ahead.
Oil retailers say they've seen a surge in customers who are taking advantage of price-cap contracts or plans that allow them to spread payments over a year. While the plans have been offered for years, they most often were used by companies, not private consumers.
A big incentive? Last year's heating oil prices surged to more than $2 a gallon, socking consumers in the dead of winter and catching them off guard.
Heather Allen was able to escape the sticker shock by locking in her oil price for the past three years. This year she's been advising all her family and friends to do the same.
``If last year was any indication, it would be crazy not to sign up for this kind of price protection policy,'' said Allen, a widowed mother of two teen-age boys from Hingham. ``I know it saved me money. I'm guessing $600.''
Len Bicknell, president of Alvin Hollis & Co. in Weymouth, said about 60 percent of the company's 8,500 residential customers have signed up for a price-cap program â€” more than double last year. The company has offered prices as low as $1.19 9/10 per gallon, with a guarantee that if retail prices drop below that, customers will get the lower price.
``I expect last year shocked and frightened a lot of people,'' Bicknell said. ``I think our customers like to be in control of the situation.''
And it's a benefit to oil company officials, who can see profits locked in.
Julie Tanner, the office manager of Kleen Oil Ko. in Portland, Maine, said that normally only about 20 of the company's 3,000 customers opt for prepaid contracts. This year, the company has received three times as many requests.
The industry does not track the number of people with payment programs, but there is a definite trend.
``There is clearly more interest,'' said Michael Ferrante, president of the Mass Oilheat Council Inc. which represents more than 300 Massachusetts oil retailers.
A number of factors last winter combined to drive up oil prices, including decreased production by OPEC nations and a severe cold spell in January and February. Home heating oil, which averaged 80 cents a gallon in February 1999, rose as high as $2.20 a year later.
Oil prices will probably not rise as high as they did last year, but choosing an alternate payment plan is probably a good idea, industry analysts said.
However, some industry officials caution consumers planning too far ahead might not be saving all they can.
``We're in a period of falling prices now and we're so far from winter the odds are that prices will be lower in two months,'' said Mike Lynch, of WEFA Energy Co. in Bedford.
Not all consumers are convinced that locking in a price now is a good thing.
``No way. What if the price goes down?'' said Angelo Zouharis of Marlboro. ``I'll just have to take a chance.''
Merily Tinel, of Newington, Conn., said she would jump at the discount programs being offered now â€” if only her tank wasn't already full.
``We've got no place to put it,'' she said. ``We're just going to hope we run out before prices get high.''