Oil prices to jump 30 percent next year Neediest Vermonters will take the biggest hit
Frank Pastor has spent three years in a house that reaches about 52 degrees in the winter. His Cabot home is poorly insulated and a small propane heating unit can't keep up with winter's cold.
This year, Pastor is expecting to set the thermostat about 10 degrees warmer. The state is helping the 62-year-old who suffers from diabetes and has no feeling in his feet to winterize his home, and a USDA Rural Development grant will pay for a new oil furnace.
Filling his new oil tank will be costly, though. Heating oil costs are expected to rise more than 30 percent this year, from about $1.60 a gallon to $2.10 for pre-buy prices.
Johnson & Dix Oil and Propane has set a pre-buy price in the Barre area at $2.09, up from $1.59 last year, said company vice president Tom Frawley. Propane, or gas, is also rising by a similar margin to $1.79 a gallon, he said.
"We really have no control over it. We try to basically cover our expenses," Frawley said. "Everybody is sort of in price shock, of course."
Pre-buy prices are typically a discounted price for customers who pay for a certain amount of oil prior to the heating season. Those who pay month-to-month or after each delivery during the winter months can expect to pay even more.
Other companies said they hadn't yet set pre-buy prices, but were predicting similar increases.
Some of Rutland company Hugh Duffy Coal & Oil's larger customers, including Castleton State College and area churches, are bracing for 25 to 30 percent price jumps.
"That's what everybody in the industry is advising," says Terry Moran, an owner of Hugh Duffy. "I think you're going to see the pre-buys in the $2.10 range across the board."
The company charged $1.499 a gallon for pre-buy sales last year and is waiting to lock in the price this year, hoping oil prices take a dip.
Companies set their pre-buy based on the price they lock in from future's contracts on the commodities exchange, Frawley said. Oil prices, just like gas prices at the pump, are up and heating oil companies' business expenses are rising, too.
The cost of insurance went up following Sept. 11 and homeland security concerns. The cost of trucking fuel has also risen because of higher gas prices.
The price increase means more people will visit the Open Door Mission's soup kitchen as they give up buying food in order to pay for heat, said Sharon Russell, executive director of the Rutland mission.
Russell says higher heating costs will also hike up rents and force the poor out of apartments and into the mission's shelter.
At the same time, Russell said, the shelter's own heating costs, now at $7,000 annually, will rise.
"We will have to cut back to be able to meet the need. We juggle where we have to juggle," Russell said. "The elderly are the ones who are going to suffer. They're going to go without medicine to heat their house."
The Central Vermont Council on Aging can offer limited assistance for fuel, but that pool of money is already drying up, said Dagny Hoff, case manager supervisor.
Those on fixed incomes simply can't absorb additional expenses, including the $500 more they will have to pay this year for the same 1,000 gallons of heating oil.
"I think we're looking at a state of emergency in the elder care field," Hoff said.
Heating assistance for those who are income eligible is available through the state Fuel Assistance Program and from community action agencies on an emergency basis during the heating season.
"We're seeing more and more people in the emergency fuel program. We're seeing folks we've never seen before," said Hal Cohen, executive director of the Central Vermont Community Action Council Inc. Cohen said higher oil prices will hit the working poor hardest.
Community action councils pay for up to three 100-gallon emergency drop-offs per family each year, Cohen said.
"There are a lot of people who made due. In other words, nobody froze but a lot of people were cold," he said.
Frawley of Johnson & Dix said many of his customers conserved. They turned down thermostats, shut off rooms and used alternative sources, such as wood, which has also gone up.
With rising prices this year, said Cohen, demand will outstrip available state emergency resources, which are primarily federal funds passed through the state.
Last year, to make up for a shortfall, the state raided its Weatherization Trust Fund, which provides weatherization to the poor to reduce heating costs. That fund is too depleted to borrow from again this year.
"It's also poor energy policy to raid a program that's meant to give people long-term energy savings," Cohen said.
This year, Cohen said his agency will likely have to turn away some people. Something will have to be done, however, he said. "Our state doesn't let people freeze," Cohen added.
Pastor, who lives on a fixed income, says he'll take his high oil bills one month at a time and hope that he can make ends meet.
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