Record Heating Oil Prices Stoke Wood-Stove Demand

It's summer in the United States, but many Americans are already fretting about winter.

Record prices for home heating oil are rippling across America's northern regions, stoking demand for wood stoves and other alternatives, and forcing some heating oil companies out of business.

AP / AP Consumer Shops for Pellet-burning Fireplace

In New England, which has the nation's highest rates of heating oil use, homeowners are bracing for a near doubling in the cost to fill home oil storage tanks compared with last year.

The surging cost has spread alarm among heating oil distributors, mainly small and often family-run businesses.

Their profit margins already squeezed, they now face the prospect of taking on unprecedented amounts of debt to buy fuel for winter.

"It's cutting into us really deep now," said Ray Scarfo, president of Ranco Fuel, a 33-year-old family-run business in Medford, Massachusetts.

"We don't even know if we'll even have a heating oil business when it comes to next winter."

Three heating oil companies have failed since March in Connecticut.

Vermont is creating a task force to help residents deal with rising heating oil and gas prices, and from Maine to Minnesota authorities are warning residents to prepare for a surge in the cost of staying warm.

On July 9, the governors of Maine, Massachusetts, New Hampshire and Rhode Island called on Washington to increase the region's home heating assistance to $1 billion from $252 million last winter.

"This is a human catastrophe coming at us in the state of Maine in terms of energy supply and costs," Angus King, the state's former governor, told a recent alternative energy industry gathering.

Maine has the highest rate of heating oil use in the nation, with about 87 percent of homes using heating oil or kerosene.

King said he expects the cost to fill a typical family's heating oil storage tank in Maine could top $1,000 this winter, double last year's cost, following a recent spike in heating oil prices above $4 a gallon.

Other estimates put the cost at about $800, up 60 percent from last year.

"Most people are going to have to fill up that tank six times," said King.

"How is somebody who is making $350 or $400 a week going to pay to fill up the tank to keep warm?"

New England pays more for energy than the rest of the nation because of its reliance on fossil fuels such as oil and natural gas extracted from distant states and countries.

The Massachusetts Oilheat Council estimates that heating oil prices in New England are now around $4.65 a gallon, up 116 percent since 2005.

It expects prices to keep rising as the market tracks record-high crude oil prices.

Many homeowners are searching for alternatives to oil.

Sales of wood-burning stoves -- in use since before American independence from Britain -- are brisk, even as customers don shorts and bask in summer weather outside.

"Demand for wood pellet stoves has tripled. We're pre-sold out until probably the New Year," said Tim Bushey, manager at Frost & Flame in Gorham, Maine, which sells wood stoves and stoves that burn wood pellets.

"Right now we have over 300 wood pellet stoves sold and almost 800 tons of pellets," he added.

Wood pellets are usually made from compacted sawdust.

The Pellet Fuels Institute, a trade body for the U.S. wood pellet industry, said manufacturers are expanding capacity to meet growing demand.

"Could there be an unprecedented run on pellets? I don't think that's out of the question. But I think things are happening early enough in the season that certainly our manufacturers will have the ability to ramp up their production as needed," Bushey said.

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