Paying the price -- Instability rattles heating oil market

In recent years, home heating oil prices in the Capital District operated like a seesaw with the cost of filling a tank increasing as winter temperatures fell, and then consumers getting a break as the thermometer climbed.

The prices of other fuels like gasoline did just the opposite, as good summer weather meant a strong driving season that pushed up demand for gas and prices along with it.

All that changed last year when Hurricane Katrina hit the energy market like a lightning bolt out of the blue, decimating much of the nation's refining capacity in late August and leaving local consumers with energy bills that took an extra large bite out of their wallets.

Now, a full 14 months later, consumers are left trying to wend their way through an unsettled market that's being affected by everything from the war in Iraq to the nearness of national elections, according to Greg Mihailovich, director of New York Public Interest Research Group's Fuel Buyers Group.

The changing market dynamics meant that the usual drop in oil prices after the Labor Day holiday didn't materialize this year, and it may have contributed to local consumers holding off on oil deliveries last month.

Business has been good but we usually get a lot of orders from people who are topping off their tanks in August and September with 700 or 800 gallon deliveries before the season starts and we didn't get as many this year, said Judy Miller, the business manager with Delmar-area Helderberg Oil. "We've been in business for 10 years now and it seems like customers may be changing their buying habits after everything that happened with Katrina."

In mid-October, customers who held off may have benefited from a more than 20 percent drop in world oil prices. That temporarily pushed the cost for a barrel of crude oil below $58 on world markets and led to lower prices at area gas stations. But it came too early in the season for a major impact on heating oil and on Friday the good news appeared to be ending when the New York futures market closed with that same barrel of oil going for $60.75.

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