STICKER SHOCK: Fuel costs to heat homes significantly up from a year ago

ELIZABETHTOWN — As temperatures continue to drop, homeowners can expect to pay more to heat their homes this winter.

In actuality, they can expect to pay significantly more.

Experts are saying heating oil already has risen 43 percent from a year ago. Natural gas and other fuels, like propane, are also surging higher. Nationally, the average price of heating a home is now about $1,700 a year, according to the financial website MSN Money.

Nearly half the homes in this country use natural gas for heat, and those homeowners could pay an average of 30 percent more than one year ago.

“I don’t know where it stops. I really don’t. I’d be scared to put a number on it,” said Kyle Taylor, a co-owner and operations manager of the Elizabethtown office of the Bobby Taylor Oil Company. “But if we get to where we can’t sustain an inventory and build some inventory, I don’t see the price going down anytime soon.”

The business was established in Elizabethtown 12 years ago.

According to Taylor, when it comes to his company, the price of propane to fuel a customer’s house is up 40 percent t0 42 percent over last year at this time. As a result, he said, people can expect to pay an additional $60 to $80 more in their monthly bill.

As for heating oil, he said, that cost is now well over 50 percent more from 2020: Last year it was “costing $250 to fill a tank. Now they’re looking at $330 or $340.”

And the prices for those home heating services are rising daily, he noted.

“Our margins haven’t increased. The margin that is set on the fuel. The profit we try to make on it,” he said. “Our margins have not increased at all. The only thing increasing is our cost to us. In turn, you have to pass it on to the consumer.”

A representative of Campbell Oil & Gas Company in Elizabethtown opted not to be interviewed for this story. Management with Amerigas in Elizabethtown and Walane Gas Company of Bladenboro could not be reached for comment.

Whether consumers have an oil or propane tank, experts recommend you refill now rather than later. Federally funded programs exist that can help low-income households with heating bills.

Taylor, at the time of interview the last week of October, said his company had not experienced problems maintaining adequate inventory. “Supplies are flowing in as normal right now,” he said.

As for how he determines the cost of propane and heating oil to the consumer, everything in the petroleum industry figures into the price. Among those factors, he listed labor costs, cost to operate the trucks, health insurance and workers compensation.

“The rising cost goes back to the product that we’re exporting out of country,” said Taylor. “So they’re paying more money for product overseas which, in turn, they load it on ships. They’re exporting it out of the country, which drives our inventory down and drives the price up.”

This upward trend on fuel prices probably started some two months ago, he recalled. “Sixty or 70 days ago, we started seeing increases everyday. And you saw the inventory in the United States going down,” he said.

Patrick De Haan serves as the head petroleum analyst at GasBuddy, which provides ways to save money on fuel.

“Everything here in the last three weeks. I think we were in the mid 70s. Now we’re in the mid 80s,” he said of the price of a barrel of crude oil. “And part of that happening, most of that is happening because of two things. There’s been an ongoing energy crunch that’s developed in the last month or two. In Asia, China is dangerously low on coal inventories to feed power plants. As a result, they’re buying up oil. They’re buying up natural gas. They’re buying up any coal they can find. So that’s pushing demand for oil up. At the same time, Europe is suffering from a natural gas shortage ahead of winter, which is causing all-time record highs there for natural gas.

“And that is costing some electric productions to switch from natural gas to oil because the cost of natural gas is at an all-time high,” he said. “As a result of this energy crunch, oil demand is likely accelerating significantly.”

The “other part of the problem,” he said, is OPEC — which met recently to discuss the effects of the energy crunch. The Organization of the Petroleum Exporting Countries, a cartel of 13 countries, decided not to increase oil production more substantially.

As a result, oil prices have soared.

The global demand is going up. Supply is there, De Haan said. But it’s worth more “because there are more hands in the cookie jar globally.”

U.S. oil production is running about 2 million barrels lower than it was pre-COVID-19, reports say.

“Having said that, we’re not dealing in shortages,” he stressed. “Demand is high. We could eventually get there — worried about supply. If it’s a real cold winter, I would be worried about it. But this is just a tight market. As a result, we’re probably not going to see much improvement for the holidays, if any at all.”

The petroleum analyst said he doesn’t want to sound too alarmist.

“I think the slow and steady upward trend that we’ve been seeing could play out for another couple of weeks,” De Haan said. “Maybe a little longer than that. It depends on what happens. If we get a cold bout of weather across the U.S., that could cause natural gas to rise even further. But that’s a wild card. If we get a really cold winter, things could get worse before they get better. I don’t think there’s going to be any shortages. This is simply going to be a squeeze on what you’re paying.”

And that, he said, would affect all forms of enegy needed to operate anything “from airlines to buses to ships. Every type of energy is going to be more expensive this winter … The production slowdowns from early in the pandemic are now coming back to bite because the economy is rip-roaring.”