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OIL PRICE HIKE TIED TO SHORTAGES

The sharp December rise in home heating oil prices was brought on by simple economics, where demand was so great and supplies so short that refineries had to increase their prices, Donald Clarke, chief Northeast representative for Mobil Oil Corp., told a special state panel Tuesday.

Home heating oil prices increased, on average, from less than a dollar a gallon in November to more than $1.50 per gallon by the end of December, according to state officials. Prices for propane gas, also used for home heating, rose by 37 percent from November to December, they said, and consumer groups and politicians have accused the oil industry of taking unfair advantage of the unusually cold December's need for home heating fuel

But Clarke and other industry officials said oil companies and dealers were caught in the same bind because transportation problems, including frozen waterways, "high seas" and cold weather damage to oil refineries, reduced available supply and made it more expensive to produce and deliver oil.

Jay Halfon of the New York Public Interest Research Group said that the still-high oil prices are because of "retailer gouging." That means the home delivery companies are taking their time in bringing heating oil prices in line with lower wholesale prices, Halfon said.

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