After a summer of record crude oil prices and incredible volatility, Nekoroski Oil's Nancy Hart is making some unusual phone calls to customers these days.
"We can tell them, 'Don't make a payment in December — Merry Christmas," said Hart, the Beverly company's office manager.
Hart's budget plan customers had been paying toward oil expected to stay near record highs, but prices have plummeted. Increased fuel assistance also means many homes could be warmer even as the economy slows. A state energy agency reported Tuesday that oil sold for an average $2.75 a gallon, down nearly $2 from July's $4.71 price.
Yet not everyone's benefiting from falling prices: People who locked in fixed-price contracts over the summer are held to the costly contracts, which mean they may pay nearly twice as much for the same gallon of heating oil.
Office manager Tim O'Brien said some of Ashley Fuel's customers demanded the fixed-price contracts when prices were on roller-coaster paths.
"We were trying to discourage the contracts this year because it was just too volatile. I think most are glad they didn't enter into any contracts right now, although some did want the protections," he said. He declined to say how many signed the contracts.
OPEC and Goldman Sachs both said this summer that crude oil could hit $200 a barrel. It sells for about a quarter of that price now, and companies and customers that roughed out the speculation are benefitting.
Michael Parker, who runs Mike's Oil in Beverly, said he may have lost a few customers when he wouldn't sign price-capping contracts. He said he knew the market couldn't sustain oil prices near $150 a barrel, and he was right. He was selling heating oil this week for $2.52 a gallon.
"I heard it was going to go over $5, and I know people that locked in at $5.09 with other companies," he said.
Also making things smoother: Government aid is easier to get.
Last year, families of four had to earn less than about $42,400 to get heating help; this year, families of four can still get some aid if they earn as much as $53,608, said Beth Hogan, who oversees utility assistance programs as executive director of the North Shore Community Action Programs.
Though oil is cheaper and aid is more available, she's worried about her clients because layoffs are up, paychecks are flat, and prices for food and other basics remain high.
"We want to encourage people to apply (for aid), because it could be the difference between going without heat for a period of time and not," she said.
Dick Gandt, who as a Topsfield selectman is responsible for paying heating bills at his house and Town Hall, was nervously watching the futures market. Wholesale oil futures are selling for about $1.80 a gallon through the winter.
"It's much, much more reasonable than it was over the summer. I'm really hopeful that it stays this way through the winter," Gandt said.
At Nekoroski Oil, Hart thinks her customers would be angry if they'd signed a contract. Instead, she pushed about two-thirds of her customers into 10- or 12-month budget plans. Because they were paying in anticipation of the higher prices, some customers have balances of $1,000 or more. Hart won't collect from them next month, she said.
Michael Ferrante, executive director of the Massachusetts Oilheat Council, said customers with fixed-price contracts are angry now that the oil prices have dropped. Their dealers are frustrated because they had to buy contracts at similar high prices to supply the customers, he said. Most dealers tried to discourage the fixed-price contracts.
"This is really the second time in 18 years where these contracts have not worked well. Consumers have benefited from these contracts for at least a decade," Ferrante said.
Oil dealers are lobbying Washington for aid, saying they need loans to break out of the high-priced contracts so they can start serving their customers again.
Heating oil prices
1 year ago$3.17
July 8$4.71
Now$2.75
Source: Mass. Department of Energy Resources
