Ahead for Heating Oil Users: a Record-Shattering Winter

U.S. News & World Report

Ahead for Heating Oil Users: a Record-Shattering Winter
More are seeking assistance as the average bill tops $2,000
By Marianne Lavelle
Posted January 10, 2008

Penny Osborn never before needed help with the cost of heating, but the 57-year-old physician's assistant had been out of work most of last year recovering from cancer surgery. And as cold weather set in, she faced an $855 bill to fill up the oil tank of her Colfax, Iowa, home—a delivery that would last only half the winter and already cost more than she paid for heat all last season. Osborn was able to fuel up only with federal and state energy assistance, which defrayed about 60 percent of the cost of her first provision of oil. Unfortunately, two days after that delivery—while Osborn and her 78-year-old mother, who shares her home, were visiting relatives on Thanksgiving Day—a thief siphoned her oil tank dry. "It rated right up there with getting the diagnosis of cancer," Osborn says of the discovery. With temperatures below freezing throughout December, she borrowed money from friends to buy enough oil until her doctors cleared her to work again. "My prayer is that I'll find work very shortly," Osborn says.

Although Osborn's run of misfortune was unusual, the same kind of sticker shock is rattling households in all cold-weather states. The average cost of U.S. home heating this winter is expected to be up 11.2 percent over that in 2006-07, with the price tag of $989 expected to surpass even that following Hurricane Katrina, when the fuel supply was squeezed. And the situation is far worse for the 7.9 million American households that use heating oil, because its price is directly tied to the volatile global crude market. For them, the average heating bill is estimated to be $2,019, up 37.6 percent over last year.

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Last winter, the problem became especially severe in Minnesota, where an unprecedented 26 percent of CenterPoint Energy's customers had fallen behind in paying their gas bills, leaving the utility looking at $106 million in accounts receivable by spring—more than double the amount a year earlier. "Higher energy prices on top of the overall economic situation, the credit and mortgage crunch, and the fact that the federal support hasn't kept up—it was the layering effect of all these things," says Scott Prochazka, CenterPoint's vice president for customer service. CenterPoint worked aggressively to help customers wipe out their delinquencies, successfully cutting its receivables by more than half.

The process was not without pain. Minnesota, like most states, limits utilities from cutting off service to households during cold weather. But when warm weather returned, CenterPoint disconnected 30,000 Minnesota customers from gas service until they agreed to payment arrangements—six times the number of disconnections in 2006. (Close to 90 percent of the disconnected residences were back in service by winter.) At the same time CenterPoint was noticing another trend—a 61 percent increase in customers paying by credit card. Indeed, a survey by CreditCards.com found that nearly 9 percent of Americans—an estimated 20 million consumers— say they will use credit cards to pay heating bills this winter. Strikingly, the lowest-income households were the likeliest to pay utility bills on credit.

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About 38 million U.S. households are eligible for home energy assistance, up 78 percent since the program was started in 1981, but funding has not kept up. The program now reaches only 16 percent of those who qualify, and the typical grant covers less than a third of the average winter fuel cost. The 2008 budget that Congress and President Bush finally agreed upon appropriated $1.98 billion for LIHEAP—the same as last year—but set aside a significantly expanded emergency fund of $590.3 million. The ink had barely dried on the bill when states were calling on President Bush to release the money.

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http://www.usnews.com/articles/business/2008/01/10/ahead-for-heating-oil-users-a-record-shattering-winter.html

temps down to 0 degrees at night.

Fuel oil running at $3.31/gal with usage running about 85 gallons a month.

That is the fuel that has had the road tax removed. Truckers are paying less even with the road tax included.

A very expensive winter.

At this point, a sensible government would provide economic
stimulus by subsidizing switching to solar heat, groundwater
heat pumps, and other alternative heating methods. This would
create both the need for equipment and materials (which might
be even be manufactured in the United States) and the labor
to install these systems.

'Shame we don't have a sensible government, ehh?

Tesha

anything. Even a whopping couple of thousand dollars - with money for kids - is not going to help with mortgage or with energy bills.

Investing in infrastructure and in more efficient energy will provide jobs and make a lot of difference. It is like the old saying about the difference between giving someone a fish or teaching him how to fish.

Perfect storm is brewing.