WASHINGTON (Bloomberg) -- This year's 42 percent rise in crude
prices means millions of Americans will pay more to heat their homes
this winter, and that could push the rate of inflation higher in
Even though some analysts say crude oil prices have peaked and
be heading down, consumers who are filling their tanks now in
preparation for winter won't escape higher prices. Heating oil
futures reached a 5 1/2 year high two weeks ago as traders
anticipated refiners would pass on the higher prices they have had
pay for crude.
In Peabody, Mass., the 200 customers who buy their heating oil
from Heat-Tech Oil Heat Service are already paying 5 percent to 10
percent more than they did at this time last year, said Maureen
Reardon at the company.
"It's only October, but prices have been going up instead of
down," she said.
Already, politicians have sounded the alarm about soaring heating
costs. In response to pleas from Northeastern lawmakers, Energy
Secretary Hazel O'Leary summoned oil company executives last week to
discuss ways to ensure heating oil supplies are adequate this
They convinced O'Leary that oil inventories, though at their
lowest level since the 1970s, were not low enough to justify selling
oil from government stockpiles to hold prices down.
Still, the meeting may have spurred action to increase heating oil
Just Tuesday, for example, the Colonial Pipeline Co. said it's
using spare capacity in a pipeline that usually carries gasoline to
boost shipments of heating oil from Texas and Louisiana refineries
That sent the price of heating oil for November delivery down as
much as 2.03 cents to 71.60 cents a gallon on the New York
That still leaves futures prices on the Nymex 50 percent above
Rising heating prices for Northeastern residents, who use most of
the nation's heating oil, could also send up inflation gauges
nationwide. "The consumer price index in the next six months will be
up by as much as half a percentage point, as a result of the
increases in energy costs that we're seeing right now," said Sung
Sohn, chief economist at Norwest Corp. in Minneapolis.
Traders and economists estimate it takes anywhere between two to
12 months for higher crude oil prices to show up in the energy
component of the consumer price index. So far this year, consumer
prices have risen at annual rate of 3.2 percent, up from 2.7 percent
for the first nine months of 1995.
Tuesday, the Labor Department said a 5 percent jump in the price
of imported petroleum last month pushed the prices businesses paid
for imports up 0.8 percent.
"Going into the new year, higher oil prices could start to spook
the bond market," said Bill Sharp, an economist at Smith Barney Inc. …