Oil, propane and firewood prices are all up significantly from last winter, particularly fuel oil, which could mean higher bills this winter, a difficult prospect for Vermonters who are already feeling the effects of inflation in other areas of their lives. The 2022 energy crisis, the first in this country since two major supply problems in the 1970s, comes despite the fact that, in part due to the controversial fracking boom, America is now the world’s largest producer. oil and is a net exporter of oil and gas. According to experts, a series of events led to the current situation: the COVID-19 pandemic, an economic rebound, reduced investment in oil and gas production after some hydraulic fracturing companies went bankrupt and the invasion of Ukraine by Russia in February, which pushed world oil and gasoline prices soaring. The price of oil reached $120 a barrel on June 6, although it has recently declined and stood at $90.50 on August 8, from $68 a year earlier.
The high price of heating oil and propane has caused some local buyers to seek pre-purchase contracts for heating oil and propane, which are also priced higher than last year, and caused others to look to d other sources of heating such as wood stoves, pellet stoves, and heat pumps (see article page 5 on heat pumps).
According to Steve “Freff” Hedges, a longtime Stove and Flag Works employee who now works in the Montpellier store, demand for wood stoves this year has been “manic” due to rising oil prices. “We’ve probably seen a double increase in sales of wood stoves and pellet stoves over the last year,” he said. Although the store has stoves in stock, many woodstove deliveries are expected a month later, and some people will wait until January to get the woodstoves they want, he said. Supply chain issues over the past two years have been an issue for the industry, and labor shortages at stove makers have also been an issue, Hedges said. In addition to switching fuel, another way to offset high prices is to insulate and weatherproof your home. Efficiency Vermont offers a one-time discount of up to 75% for weatherization work. For more details, visit www.efficiencyvermont.com/rebates. At today’s prices, insulation will pay for itself even faster than in recent years. In September a year ago, the average retail price for a gallon of fuel oil in Vermont was $2.77, and this month it’s $4.73, according to data presented on the website. from the Vermont Department of Public Service on August 8. That’s a 71% increase. Average retail propane prices rose 17% to $3.20 per gallon over the same period, according to the same website. Piped natural gas is a cheaper way to heat, but in Vermont it is only available in parts of Addison, Franklin, and Chittenden counties, with the gas pumped there from Canada. Some fossil fuel customers like to pre-purchase their kerosene or propane, locking in a known price, although this requires paying a season’s energy bill in advance. However, a number of local energy companies have been slow to offer pre-purchase pricing this year due to market volatility. For example, East Montpelier-based Alco Energy Products typically offers customers pre-purchase pricing in early summer, but this year it resisted. But Brian Phillips, owner of the company, said in early August that he expected to have a pre-purchase price by mid-August. Some oil companies were charging spot customers $6 a gallon in May, Phillips said, “but prices have come down over the last month or so.” His company’s spot prices at the beginning of August were $4,399 per gallon for fuel oil and $2,999 for propane customers who heat their homes with propane (propane prices vary depending on usage annual). “Propane prices are a bit more stable than oil prices,” he said. Compared to Alco’s pre-purchase prices last year, propane is up about 50 cents a gallon, while heating oil is up more than $1.50, he said. Some other companies offered pre-purchase pricing. Trono Fuels of Barre recently had a prepurchase oil price of $4.45 per gallon; the offer expired on August 15, although they may allow latecomers to participate in the offer. The Colchester-based Energy Co-op of Vermont is offering a pre-purchase offer through October; the price may vary, but it was recently $4.59 per gallon for fuel oil. Northfield’s Gillespie Fuels had a pre-purchase propane price of $3.52 a gallon that expired July 25, but they also said they could let other customers buy at that price. Their pre-purchase fuel oil price was $4.96 per gallon. Gillespie noted that cash buyers can get 10 cents per gallon if they pay within 10 days.
Rising wood costs
Oil and propane aren’t the only fuel prices to rise. According to Hedges of Stove and Flag Works, the price of a cord of wood has risen about 10 to 15 percent over the past year, to between $280 and $350 depending on drought and other factors. “Supply is tight because there are fewer people working in the woods and more people buying woodstoves,” Hedges said. “It’s getting late to buy wood for this winter.” Unlike other fuels, wood pellet prices have been fairly stable, Hedges said. His store sells pellets for $295 a ton, and he estimated that someone using pellets as their primary heat source would use four tons, or $1,200 a year. Store sales of stoves are split about evenly between pellet stoves and traditional wood stoves. Certain high-quality, cleaner-burning wood stoves are eligible for a 26% federal tax credit, he noted. Hedges had a word of caution for those returning to wood burning after a few years away: get your chimney checked. Chimney sweeps are also backed up, which can be tricky. But Hedges fears that if buyers aren’t careful, the boom in woodstove sales could lead to more chimney and house fires this winter. While oil prices have fallen this summer, in part due to fears of a possible recession, it is unclear what could happen by this winter. Europe faces a much more severe energy crisis than the United States, and further geopolitical shocks there or in Asia could potentially push prices higher. On the other hand, prices could continue to fall, especially if a slower economy reduces demand for energy. High prices themselves can reduce demand for energy sources. For example, July gasoline consumption in the United States was the lowest since July 1997, with the exception of the first pandemic year of 2020. The peak gasoline price this year of about $5 per gallon apparently caused drivers to drive less in July, and gas prices are now falling. To date, the increasing use of renewable energy sources such as solar and wind power has not been significant enough to offset the nation’s continued thirst for oil, propane and natural gas, although the Inflation Reduction Act just passed by Congress is expected to further stimulate the expansion of renewable energy. energy and help reduce the amount of greenhouse gases that most scientists believe warm the climate. The bill includes an expanded tax credit for energy-efficient home improvements, such as new insulation and new windows. The bill also expanded and extended a federal tax credit for heat pumps, biomass stoves, residential solar power, and it includes a tax credit for battery storage systems. Most tax credits appear to take effect for work done in 2023 and beyond. Energy industry analysts still expect global oil demand to remain strong over the medium term as the US population continues to grow and developing countries around the world strive to adopt the type of energy-intensive economy and way of life that prevails in the first world. countries.
Need help paying your heating bill this winter?
The Vermont Agency of Human Services helps pay seasonal home heating bills for Vermonters whose gross household income is at or below 185 percent of the federal poverty level. Offer applies whether you own your home or rent and pay for heat directly or as part of the rent. If you received fuel assistance last season, you will receive an annual review form which you must complete and return. If you did not receive fuel assistance last winter, there are several ways to apply, including by phone at 800-479-6151 or online at dcf.vermont.gov/mybenefits.