Figures exceed predictions made in OctoberDespite recent mild temperatures, colder days — and higher heating bills — are still on their way, according to a forecast released Tuesday by the federal government.
Heating oil consumers can expect to pay a record high average of $2,544 to warm their homes this winter, about $450 more than last year, according to an analysis by the Energy Information Administration.
Tuesday’s estimates were slightly higher than those released earlier in the season. In October, the agency predicted an average cost of $2,494 for the winter. Even a small increase, however, can have a significant effect in the Northeast, where 32 percent of households depend on oil heat, a considerably bigger proportion than elsewhere in the country.
Those who rely on natural gas — about 51 percent of Northeasterners — will pay an average of $1,031, close to $200 higher than last year. That estimate is about $20 higher than predicted in October, but overall prices have been falling as new sources of natural gas have become available in the United States.
Heating bills are expected to be that much higher because the government forecasts a more typical winter. Last year’s unusually warm weather kept thermostats lower, but this year the government expects consumption for heating oil and natural gas customers to increase by about 18 percent.
The rising cost of oil heat is of particular concern for low-income households that depend on federal fuel assistance to warm their homes. Applications are flooding in to the offices of Action for Boston Community Development Inc., an agency that administers heating aid in Boston and surrounding municipalities, said its president, John Drew. Last year, the group processed 18,000 applications; this year he expects to see as many as 24,000.
“We have an awful lot of people in need,” he said. “They’re more desperate than last year.”
And the aid they get may not be enough, he said. The maximum heating oil benefit this year will
be slightly above $1,000, which hardly covers a full tank of oil at current prices, Drew said.
Oil dealers are also worried. Last winter, with its unseasonably warm temperatures, was not a strong one for the heating oil business, said Michael Ferrante, executive director of the Massachusetts Oilheat Council, a trade group.
Even with colder temperatures this year, elevated prices could lower demand as price-sensitive customers order smaller amounts of oil at a time, Ferrante said. For dealers, however, it doesn’t make sense to send out a truck and a delivery person for orders of less than 100 gallons.
“A small delivery is just not cost-effective,” he said.
Fluctuating prices are also a concern, said oil dealer Scott MacFarlane, the owner of MacFarlane Energy in Dedham. A movement of even a few cents, he said, can make a huge difference to his bottom line. When prices change in the middle of the day, he is stuck paying higher costs that he can’t pass on to customers.
“The price goes up, we eat that,” he said.
In Massachusetts, the average price for a gallon of heating oil last week was $3.91, up 3 cents from the same time last year, according to a weekly survey conducted by the state Department of Energy Resources.
Nationally, prices are expected to rise, with Tuesday’s report predicting an average of $3.85 per gallon, up from $3.73 last winter. October estimates had a forecast an average price of $3.80.
The relatively tight supply of heating oil in the Northeast is helping keep this price so high, explained Sean Hill, industry economist with the Energy Information Administration.
Strong international demand for diesel fuel means supply is being exported, rather than going to build up reserves in the Northeast, he said. November’s hurricane further constricted supply.
“When Sandy hit, all flows of refined products were basically unable to make their way into the Northeast,” Hill said.