Heating Oil Costs Rise On East End

Even before an early cold snap descended on the East End last week, homeowners who called for a heating oil delivery were in for an unpleasant surprise.

Posted prices around the area early this week averaged about $1.29 a gallon, sharply higher than the $1.08-a-gallon average a year ago at this time, and at or close to the highest prices charged during last year's cold winter.

East Enders can find warmth in the fact that prices here are substantially below the average $1.38 a gallon charged UpIsland, according to the Oil Heat Institute of Long Island, a trade group.

Shortages

"As far as the price goes, it looks like it's going to be on the high side" this winter, said Marshall Prado, an owner of Marshall and Sons in Montauk. "But it can turn at any point."

"It's a commodity. It's going to have its ups and downs, although this year it never had its downs," agreed Richard Herrlin, president of Schenck Fuels in East Hampton.

Mr. Herrlin would not predict where prices will head. "I wish I could guess that," he said. "Then I would buy my futures, and I'd be set."

Citing supply shortages in the Northeast, Dick de Frietas, the service manager at W.C. Esp Inc. in Bridgehampton, said, "If we have a cold winter, it could go even higher."

Not Much Spread

He added that the price "spread of local companies is all within a penny or so of $1.29," so customers who want to shop at home for their heating oil will probably not find any great bargains by changing dealers.

"When the price goes down, we drop ours, too," said Mr. Frietas. "We don't like to keep it high."

Most local firms give discounts for volume purchases, prompt payments, and to senior citizens, he said.

"We're still in much better shape than we were years ago," said Mr. Prado.

Indeed, unlike in the 1970s, when the Organization of Petroleum Ex porting Countries caused oil prices to skyrocket with a series of embargoes, world supply is not the culprit today.

"There are enough reserves of crude to last 100 years. There is no shortage of anything," said Mr. Herrlin.

The Middle East, the source of most of the world's crude and a perennial trouble spot, continues to play a role, though.

Iraq Oil Embargo

Earlier this year, hoping for a drop in prices if the United Nations embargo against oil exports from Iraq was lifted as expected, wholesalers were reluctant to buy and hold large inventories. But the embargo remains in place and the expected glut of new stocks has not appeared.

Although Mr. Prado said he had had "no trouble with supplies," Mr. Herrlin said dealers have experienced difficulties obtaining long-term commitments from wholesalers, in part because of the Iraqi situation and a shortage of storage space.

"This year has been difficult. No one's been selling any contracts," he said.

Domestic stocks of crude oil are also being diverted to meet higher demand for gasoline and diesel fuel, according to the Oil Heat Institute.

Waive Diesel Tax?

Last week, the institute called on the Federal Government to allow dealers to substitute diesel fuel when heating-oil supplies are tight.

Diesel fuel and heating oil are virtually the same thing, except that diesel contains less sulfur to meet Federal air-quality standards, is dyed red so that truckers cannot substitute heating oil for it, and carries with it a 24-cent per gallon Federal tax.

The institute wants that tax waived temporarily to allow dealers to tap into diesel stocks.

"One of the biggest problems is that Europeans are paying more for crude oil than what we are paying, so suppliers are shipping more to Europe for the higher prices," added Mr. Herrlin.

"Don't panic," said Mr. Prado. "The best thing to do as a homeowner is to keep your tank full, keep your furnace serviced, and make sure your home is well insulated."