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Amid a summer swelter, thoughts turn to winter and an energy price crisis in oil-dependent Maine

Oil Prices
Shawn Patrick Ouellette
/
FR23100 AP
FILE - In this Sept. 25, 2009 file photo, Keith Franklin, a delivery driver for Cash Energy, drags the oil hose up a driveway for a home heating oil delivery in Old Orchard Beach, Maine. A day after a widely read forecaster predicted major storms for Boston, New York and Philadelphia, and even ice and snow between Dallas and Atlanta, the energy markets acted with indifference Thursday, Oct. 15, 2009.

It was an unseasonably warm day last November when Gov. Janet Mills stood outside of a home weatherization business in Brewer to tout a $100 million investment to help Mainers get through the coming winter.

At the time, heating oil was averaging $3.15 a gallon – up from a $1.89 a year earlier.

"I think it's going to be pretty severe, very serious,” Mills said when asked about financial pain on Mainers caused by rising oil prices.

Eight months later, heating oil is topping $6 a gallon in some areas. A 275-gallon tank that cost roughly $850 to fill last November would now cost a whopping $1,400 to fill, based on last week's average price. And many Mainers are scrambling to figure out how they'll keep their homes warm this winter at a time when gas, groceries and seemingly everything else is more expensive than ever.

"Last year killed us. It was horrible and this year is going to be, as you know, it's going to be worse,” said Robert Shufelt of Jay while shopping in the Lewiston-Auburn area. Shufelt said they heat with oil so they are looking at having to play it month by month this winter. “So that's what we're going to do, is just a little bit here and a little bit there."

Heating oil prices rose nine times faster than the cost of food over the past year. In fact, the price of Number 2 fuel oil rose 98.5 percent between June 2021 and June 2022, according to federal data. That is more than any other major commodity tracked by the Consumer Price Index and is 10 times higher than overall inflation for all products. The price of gasoline, by comparison, rose 60 percent during that period.

So while it's only July, homeowners and public officials in Maine are bracing for a painful – and potentially dangerous – winter heating season in a state with the nation's highest reliance on heating oil. Homeowners who run out of oil could face burst pipes – necessitating costly repairs – or dangerously cold temperatures. Others may switch to space electric or kerosene space heaters, increasing the risk of fire.

"Energy markets are global and volatile – and we've certainly experienced that volatility in Maine this winter and into this summer,” said Dan Burgess, director of the Governor's Energy Office in the Mills administration.

More than 60 percent of Maine homes rely on heating oil, which is higher than in any other state. Since last year, the Mills administration has provided $25 million to Efficiency Maine to button up homes or convert to alternative heating sources. State agencies have significantly increased financial assistance for low-income families and, earlier this year, Mills worked with state lawmakers to send $850 inflation relief checks to most Maine taxpayers.

But Burgess said consumers should also take action.

"There are signs that heating and electricity prices may remain high this heating season and we are really encouraging Maine consumers to consider energy efficiency opportunities now but also to be begin planning ahead for the winter season,” Burgess said.

He added that the Mills administration is exploring options to offer additional help to consumers but couldn't share any specifics.

The state's heating assistance programs, meanwhile, are gearing up for a frantic season.

"So it's just an unprecedented situation going into a heating season with prices so high,” said Dan Brennan, director of MaineHousing, the agency that administers the low-income home heating assistance program known as LIHEAP.

Applications are already up for fuel assistance and Brennan said he expects that to continue. Maine typically receives between $35 million and $40 million in federal LIHEAP funds but received an additional $55 million for fuel assistance and related programs during the past year as part of a congressional stimulus bill. Roughly $21 million of that money was used to provide additional fuel to LIHEAP clients while other funds went to weatherization, fuel crisis response and other programs. But if congressional funding returns to the previous levels, Brennan said that will buy a lot less oil for LIHEAP.

"We're looking at instead of being able to give a benefit that would roughly equate to one-and-a-half tanks of oil, we are only going to be able to give out about a half-tank of oil,” Brennan said. “And that's very, very concerning for us."

As of early-July, applications for fuel assistance were up 10 percent at Penquis, the community action program that serves Penobscot, Piscataquis and Knox counties, while the number of people served so far this year was up 14 percent.

“It has been crazy because people are really worried about the fuel prices but also food and medicines – everything is skyrocketing,” said Lynn Lugdon, the program manager for fuel assistance at Penquis. “So people are concerned about fuel for this winter.”

Lugdon recommends that people spread out the financial pain by starting to pre-pay now for this winter's oil. And Penquis staff are reminding clients that assistance programs are there to help them get through the winter – not to foot their heating bill.

"And it's hard for us to have to tell them, you know 'You've used your fuel assistance, you've used your emergency funds,'” Lugdon said. “We can and will suggest other places to go. But I think this is going to be a really, really hard year. And people need to start thinking about that."

Marc Lacasse, president and CEO of Augusta Fuel Company, said he and his staff are starting those conversations with customers earlier this season as they strongly urge them to consider a monthly payment plan. And interest in those plans is definitely higher this year.

"I think the dialogue and the communication at this time of the year, you know even though it's the middle or beginning of July and it's 85 degrees out, it's critical,” Lacasse said. “It really is."

Some oil dealers are offering customers the option of locking-in prices as a hedge against future increase. But because of the volatility of global oil prices, Lacasse said Augusta Fuel Company isn't even offering that to customers this winter because of the risk for customers.

“Whether it is levels of monthly payments or frequency (of payments), we are doing we need to do we can manage what, unfortunately, appears to be in front of us,” Lacasse said.

Corrected: July 25, 2022 at 6:23 PM EDT
An earlier version misstated the amount of federal LIHEAP funding Maine typically receives