Heating oil suppliers in the Northeast and New England have begun rationing the key fuel ahead of winter, after stockpiles dropped to a third of their normal levels.
Concerns are rising that supply shortages and soaring prices will leave families in the cold this winter, particularly in New England, which is more reliant on heating oil than other parts of the country.
Chris Herb, president of the Connecticut Energy Marketers Association, told Bloomberg recently that heating oil wholesalers are beginning to limit allocations for retail suppliers.
Chris Herb, president of the Connecticut Energy Marketers Association, told Bloomberg recently that heating oil wholesalers are beginning to limit allocations for retail suppliers.
The rationing measures, intended to prevent panic buying and hoarding, are in turn being imposed on consumers, limiting the amount of heating oil they can purchase, said Herb.
Heating oil, which is chemically similar to diesel, is primarily used in New York, Pennsylvania and New England, where most distribution is handled by small, family-owned businesses.
This year, New England's inventories of stockpiled heating oil are about 70 percent lower than their average level since 1993, government data show.
Supplies are lower this year due to the same factors impacting world oil markets, including the failure to rebuild production capacity following the pandemic, and disruptions from Russia's invasion of Ukraine.
According to Bloomberg, heating oil stockpiles have also been affected by a pricing structure known as 'backwardation', in which prompt deliveries are priced at a premium over deliveries in the future.
'There's just no incentive to store large amount of product,' Michael Ferrante, president of the Massachusetts Energy Marketers Association, told the outlet.
Heating oil prices have also been rising rapidly, topping $4.09 a gallon in New York last week, up from $2.46 one year ago.
The Energy Department estimates that families who rely on heating oil will see their heating costs soar 27 percent this winter.
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