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07/17/2008
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Staff photo by Jim Evansfrom the Kennebec Journal
QUESTIONS REMAIN
No complaints from those who switched to Somerset County center
Vote on 1 may hurt some in election
Steeple at center of debate in Whitefield
VETERANS REQUIRE ASSISTANCE: Homelessness takes center stage
J.P. DEVINE: Overcome sadness with hope
BASKETBALL: NBA Hall of Famer Barry doles out advice at Thomas College
HIGH SCHOOL CROSS COUNTRY: Maranacook sophomore Mace dominates Class B field
All of today's:
News | Sports
from the Kennebec Journal
from the Morning Sentinel
A year later, families await answers on fatalities
Owner of topless coffee shop on the comeback trail
Officials report cheaper, better service after switch
Two people in critical condition
Young Marines stick to program
Issue of homeless veterans at center stage
GIRLS SOCCER STATE CHAMPIONSHIP: Winslow falls to York in Class B
Bard hits her marathon stride
All of today's:
News | Sports
from the Morning Sentinel
BY COLIN HICKEY
Staff Writer
J&S Oil president John Babb is as stunned as his customers by the skyrocketing costs of heating oil in the last year.
"If definitely has caught me back on my heels," Babb said Wednesday. "If this thing were to follow regular supply and demand law, you'd expect a single-digit (percentage) increase."
Instead, what Mainers are seeing is a statewide average of $4.71 per gallon for No. 2 heating oil.
John Kerry, director of Maine's Office of Energy Independence and Security, said that price is nearly double what it was last summer.
"The amount of money that people are expending on petroleum products now is huge," Kerry said.
Babb said the extreme volatility of oil prices caused him to make changes in the price plans he offers customers.
J&S Oil has long provided customers with a budget program that has a cap or ceiling on the per-gallon price, while giving them the going rate if prices dip.
By locking into a price, customers protect themselves from spikes in the per-gallon cost of heating oil during the winter months.
But for the first time J&S Oil customers must now pay an enrollment fee to get that cap protection.
A customer who orders up to 1,000 gallons of heating oil a season pays a $200 fee. The fee increases to $300 for 1,000 to 1,500 gallons and $400 for 1,500 to 2,000 gallons.
Babb said the cap enrollment program is an insurance plan.
The fee charged, he said, simply passes along the cost J&S Oil paid to get such a price guarantee from its supplier.
Chris Jackson, vice president of the Maine Oil Dealers Association, said J&S Oil's cap enrollment is just one example of how dealers are trying to protect themselves from the volatility of the market.
"I think people have woken up to the fact that your local oil dealer is also in survival mode," he said. "At this point the dealers are really in a tough spot, because they really have no control over the cost of the product they sell. So it is very difficult."
Downeast Energy & Building Supply provides another example of this survival mode mentality.
The oil dealer does not have a cap enrollment fee, but it does add a surcharge of 25 cents per gallon for cap protection on its Easy Pay budget plan.
For a person who uses 1,000 gallons this winter, that's an additional $250 charge to the cost of the oil itself, which Downeast Energy was selling for $4.99 per gallon, according to its Web site on Wednesday.
Jackson said the higher costs on cap plans are making many consumers take a wait-and-see attitude.
"I think there are fewer people locking into prices now than there have been in the past," he said. "They're hoping those (high) prices are not sustainable, and maybe they're right."
Babb of J&S Oil said he isn't about to predict what direction heating oil prices will take this winter, but he is confident that one trend will continue.
"I think (the price of oil) is going to be volatile," he said.
Colin Hickey -- 861-9205
chickey@centralmaine.com
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