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Skyrocketing Fuel Price Spawns Calls for Investigation

December 28, 1989

WASHINGTON (AP) _ Angry homeowners, besieged oil delivery companies and governors across the Northeast are calling on federal officials to find out why home heating oil prices skyrocketed this month to their highest levels ever.

The price jump from about 85 cents a gallon two weeks ago to as high as $1.62 per gallon now has led officials from Gov. Mario Cuomo of New York to Gov. Judd Gregg in New Hampshire to call for federal investigations of possible gouging and price-fixing.

Whether oil companies are in collusion or not, public officials and industry experts agree that an unusual confluence of events has led to the highest prices ever for home heating oil.

Events ranging from low water levels on the Rhine River in Germany to a refinery explosion in Louisiana have contributed to the upsurge, officials say. Above all, though, is the record cold spell that has gripped much of the nation this month. For the Northeast, forecasters are calling for more chill temperatures this weekend after a brief respite.

″It’s pretty grim,″ said Sam Livieri Jr., vice president of Apple Oil Co. in Branford, Conn. ″No, it’s very grim. We’re telling people $1.29 a gallon and they can’t afford it. I don’t blame them for being upset.″

J. Wallace Malley, chief of the public protection division of Vermont’s attorney general’s office, said, ″It’s what some people might call a gouge.″ But he added that as yet there is no evidence of unlawful price-fixing.

Cuomo on Wednesday called on the Justice Department to investigate the heating oil price increases. ″Home heating oil is a necessity, not a luxury,″ Cuomo said. Massachusetts Gov. Michael S. Dukakis was the first to call for a probe, writing to the Department of Energy last week along with Rep. Richard Neal, a Massachusetts Democrat whose office has been deluged with calls from angry homeowners.

New Hampshire’s Gregg ordered his energy chief to call federal energy officials. Rhode Island Gov. Edward D. DiPrete sent a telegram Wednesday to the head of the Federal Trade Commission requesting an investigation into the price hikes.

″I’m outraged by what’s happened here and it’s not a factor and force of the market place,″ Neal said. ″Supplies could well have been kept low in anticipation of a cold winter in an effort to jack the prices.″

About two-thirds of the homes in New England use truck-delivered heating oil, according to the New England Fuel Institute, which represents 1,300 companies. Unlike electricity and natural gas, home heating fuel is unregulated and therefore subject to market fluctuations.

Institute spokesman Bernard Smith rejected the charge of price manipulation.

″If you take one word it’s ‘demand’ and the second word is ’weather,‴ said Smith. The low water level of the Rhine River in Germany is slowing deliveries to Europe and thus tying up supplies, he said.

In addition, cold weather in southern states has caused about a half-dozen refineries to shut down or limit production because the temperatures hamper the refining process, he said. And, an explosion over the weekend at an Exxon refinery in Baton Rouge, La., caused the heating oil futures market to soar.

Prices this week topped the previous peak of $1.35 per gallon in 1981 at the end of the Arab oil embargo, according to Smith. The lowest level of the past decade came when prices dipped to about 55 cents per gallon during the summer of 1986, according to Smith.

″One supplier jumped 12 cents from yesterday, and our retail price is now $1.23 per gallon, with a small discount for people who pay on delivery,″ Joe Bosse of Bosse Fuel in Waterbury, Conn. said Wednesday. ″That reflects the 12-cent jump in wholesale prices in New Haven yesterday.″ Energy Department spokeswoman Mary Kayne Heinze said the department was aware of the concern in the Northeast and was collecting information to assess the situation, but had reached no conclusions.

In Maine, prices are running about 10 cents per gallon behind the rest of the region.

″The port of Portland is probably in the best shape in terms of supply of any port on the East Coast,″ said Eugene A. Gilford, president of the Maine Oil Dealers Association. Nevertheless, Gilford said, even oil delivery companies in Maine are calling for an investigation into the skyrocketing wholesale prices.

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