The consequences of the global fuel supply crisis are not limited to gasoline supply stations. Millions of American families, especially in the northeast of the country, are preparing themselves for a sharp jump in home heating costs as winter approaches. Because the price of heating oil has risen to unprecedented levels following the disruption in the global supply of petroleum products.
According to a report by The Wall Street Journal, the retail price of heating oil in New York State reached $6.14 per gallon last week, showing a 66 percent increase compared to the same period last year.
The price of heating oil usually moves in step with the price of diesel. The average price of diesel across America also exceeded $6 per gallon two weeks ago for the first time and afterward reached more than $6.50.
About 4.8 million American households use heating oil, most of whom live in the northeastern states of America and parts of Alaska. The heating season in these areas usually begins in October.
"Kathy Childs," the vice president of the company "Tuxis-Ohr's," which operates in the field of fuel supply in the US state of "Connecticut," says every home that uses this type of fuel consumes about 800 gallons during the winter.
She said the war against Iran began at a time when it was expected that its consequences would be resolved by the end of the previous heating season, but the crisis has intensified instead of decreasing. The current situation is difficult.
"Mark Wolfe," the executive director of the National Association of State Energy Officials of America, has also increased his estimate of the heating cost for households that use heating oil.
Wolfe expects the heating cost for these households in the upcoming winter to increase by 43 percent compared to last winter. This is while his estimate several weeks ago indicated an increase of about 31 percent in costs.
According to the new estimate, an American family that uses heating oil may spend about $2,500 on heating next winter. While this figure was about $1,749 last winter.
The Oil Market Remains in an Uncertain State
Wolfe has warned that the level of uncertainty remains high. Because the price of oil faces severe fluctuations and may increase or decrease depending on the course of the war and the disruptions created in the supply of crude oil and petroleum products.
He explained that some households may not have to pay the entire spot market price, because fuel supply contracts can delay the effect of price increases or reduce their severity.
Also, a warmer winter under the influence of the El Niño phenomenon may reduce fuel consumption and, as a result, heating costs.
American refineries, despite operating near their maximum capacity, face difficulty in compensating for the global fuel shortage. These refineries produce heating oil, diesel, gasoline, and other petroleum products.
According to a report by the institute "Inverse Intelligence Research," the refining capacity of about 7 million barrels of oil per day in the Middle East and Russia has been damaged or faced restrictions. The extent of these damages also changes depending on drone attacks and the repair process.
"Al Salazar," the director of research at this institute, said in this regard that repairing the extensive damage inflicted on refineries may take six to eight months.
He added that even if the military conflicts end soon, a significant portion of the damaged refining capacity may remain out of operation until next year.
Sharp Decline in Fuel Reserves in the Northeastern United States
The supply restriction can be clearly seen in the petroleum product reserves of the "New England" region, including diesel and heating oil.
According to data from the US Energy Information Administration, these reserves have decreased to about 2.9 million barrels. While their five-year average has been about 4.9 million barrels.
Although the increase in fuel prices brings significant profits for refining companies, heating oil distributors do not necessarily enjoy the same amount of profit.
Kathy Childs says distribution companies usually use a fixed profit margin based on cents per gallon, not a percentage of the fuel price, to cover their costs. Therefore, price increases place more pressure on these companies instead of a proportional increase in income.
She explained that the increase in fuel prices increases credit risks, borrowing costs, and operating costs. Costs that also include transportation and diesel used in distribution operations.
Childs emphasized that distribution companies are also unwilling for the final price of fuel for customers to increase.
The price increase has especially raised concerns about low-income American households. Households that purchase heating oil in limited quantities during the winter.
The usual minimum amount for fuel delivery due to the costs of transport trucks is about 100 gallons. This is while one of the common energy subsidies is only about $500. An amount that, according to Childs, no longer even fully covers the cost of one shipment of heating fuel.
Heating oil and diesel are similar petroleum products, although they differ from each other in some additives and lubricants.
Heating oil is exempt from transportation taxes imposed on diesel but bears specific distribution costs. Because drivers must go to homes or businesses to fill fuel tanks.
Increase in the Cost of Other Heating Methods
The increase in costs does not only affect households that use heating oil.
According to estimates by the National Association of State Energy Officials of America, households that use natural gas may spend about 5.8 percent more on heating this winter.
Also, the cost of heating with electricity or propane may increase by about 9 percent compared to last winter.
However, the severity of these increases is still less than the projected growth for heating costs with heating oil.
