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Rising Heating Oil Prices, Falling Government Aid, To Hit Poor

October 3, 1990

WASHINGTON (AP) _ Despite adequate supplies of heating oil, millions of household budgets are expected to be strained this winter as energy prices soar and government assistance programs are unable to keep pace.

″We’re going back into the ‘food or fuel’ problem of the early ’70s for low-income and senior citizens,″ predicts Edwin Rothschild, an energy specialist at Citizen Action, a consumer and environmental group.

Sharply higher prices could make the average season heating bill of $800, common in much of the Northeast, closer to $1,200 this winter, government and energy experts predicted.

And federal budget negotiators are adding to the cost spiral. The new deficit-reduction plan being considered by Congress adds a 2-cent a gallon energy tax on all refined petroleum products, including heating oil, beginning in January. The jump comes as high gasoline prices and a proposed tax on gasoline impose sharply higher transportation costs on most households.

Federal officials told heating industry representatives and state energy officials this week that, barring a further flare up in the Persian Gulf, there will be more than enough supply of heating oil and natural gas this winter. Stocks are higher than any time in recent years and many customers already have topped off their tanks.

″Right now we’re in the best supply position for heating oil we’ve been in three years. ... The hope is that prices will go down,″ says Bernard Smith, executive director of the New England Fuel Institute, which represents heating oil dealers in the region.

The wholesale price of heating oil soared from about 56 cents a gallon before Iraq’s Aug. 2 invasion of Kuwait to $1.03 a gallon last Friday, although the price dropped a bit this week. Retailers have absorbed some of the increase, but consumers still face heating bills that are likely to be 50 percent higher than last year.

Clair Jarvis of the American Association of Retired Persons said elderly people on fixed incomes may be among the hardest hit and be forced to spend their food and medicine money on fuel. ″In the long run they will suffer physically,″ said Jarvis, a retired minister from West Virginia.

But oil distributors say they also are victims of the oil market.

Vera Haskins, vice president of Mauger & Co. Inc., a Philadelphia area distributor, said her company so far has passed only three-fourths of the price increase on to customers. Nevertheless, the price has jumped 40 percent since July to $1.28 a gallon.

Soaring heating prices also batter low income households at a time when the federal government and many states are cutting public assistance programs aimed at helping the poor pay for heat.

Federal energy subsidies for low-income families have been halved since 1985 to $1.05 billion for this fiscal year - enough to cover only one in every four people eligible because they are below or near the poverty level.

″We think the states should be picking up more″ of the money, said Janet Fox, director of the office in the Department of Health and Human Services that administers the fund.

Meanwhile, the Bush administration wants to phase out another federal program that helps low-income people make their homes more energy-efficient. The program provided $217 million this year, but the administration wants to cut that to $30 million for this winter, maintaining states already have money available for such programs.

But many state officials said their energy conservation funds are shrinking.

″The states have either spent or already committed the lion’s share of these funds,″ said Jan Freeman, executive director of the state energy office in Pennsylvania. ″The money is drying up. It’s not available any more.″

″The answer that the market is working and everything is OK is not satisfactory,″ said Vermont energy official George Sterzinger. ″We’re just concerned about whether people will be able to afford something that is a necessity and will become an increasing necessity in about a month.″

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