Dear Customer,

World energy prices have certainly grabbed the spotlight lately. With crude oil prices topping $50 a barrel and gasoline prices exceeding $2 a gallon, the headlines have not been very comforting.

Oilheat customers have been feeling the pinch as well. Higher delivery prices and monthly statements are affecting everyone’s wallets.

We know you have some questions as we approach the heating season and we hope this guide will provide you with some answers.

The cost that we pay for the oil we sell to you (the wholesale price) is over 65% higher than it was last year at this time, including oil we are buying now for winter deliveries. This has put dealers across the country in a difficult situation.

Nobody wants to pass on this expense to customers, but shouldering the added burden would put even the largest companies out of business.

Cost of the raw product has gone up...

Crude oil accounts for about 50% of the wholesale cost of a gallon of heating oil. When crude prices rise, this affects everything from heating oil and gasoline to even natural gas prices. And as of this writing, crude oil is up 77% over last year.

Because world demand is higher...

Rapid industrial development in China, India and other developing countries, combined with the economic recovery in the U.S., has resulted in a greater demand for oil. World energy demand hasn’t risen this fast since 1996, says the International Energy Agency.

...and investors are staying skittish.

In the commodities market, even a perceived change in conditions causes a heavy volume of buying and selling. Oil traders estimate that unrest in the Middle East has added a “risk premium” of $4–$8 to a barrel of crude oil (The New York Times, 5/16/04).

	Natural gas and propane prices have shot up recently as well. And remember, in most states where oil has a significant market share, oil has been cheaper than gas for nine of the past ten years.
*The chart shows the combined average residential price for heating fuels, in per-gallon equivalents, for Conn., Maine, Mass., N.H., R.I., Vt., Del., Md., N.J., N.Y., Penn., N.C., Va., Ohio.