‘A complete yo-yo’: Local oil companies speak to wildly fluctuating prices 

  • Jay Chaplin has been delivering oil for the Orange Oil Co. for 40 years and has never seen the price of heating oil so high. Chaplin is pictured delivering oil to a residence in Orange. STAFF PHOTO/PAUL FRANZ

  • Jay Chaplin has been delivering oil for the Orange Oil Co. for 40 years and has never seen the price of heating oil so high. Chaplin is pictured delivering oil to a residence in Orange. STAFF PHOTO/PAUL FRANZ

  • Orange Oil Co.’s offices at 45 Elm St. in New Salem. STAFF PHOTO/PAUL FRANZ

Staff Writer
Published: 4/4/2022 3:53:00 PM

Crude oil, from which heating oil is derived, is the most traded commodity on the planet. This reflects a constant worldwide demand for the petroleum product, and consumers are left feeling the pinch as the cost to keep warm reaches record highs for a multitude of reasons.

According to the state Department of Energy Resources, the average price of heating oil was $5.16 per gallon as of March 28, up from $4.87 the week prior and $2.85 a year ago. Still, the price has seemed to fluctuate on nearly a daily basis due to demand in colder months, choices made by politicians, the war in Ukraine and market manipulation by corporate leaders.

“I’ve never seen swings in a day like I have this year,” commented Michael Mackin of Mackin Fuel & Trucking in Greenfield. “It’s a bouncing ball. This year’s worse than even in 2008.”

He said his heating oil cost $4.82 per gallon as of March 9. His previous highest price was $4.22 on July 4, 2008.

Mackin credits the fluctuating prices to the fact that oil is “pretty much treated on the market like pork belly.” Pork bellies, the boneless and fatty cuts of meat from the belly of a pig, are a commodity once traded in such a way that they were sold by producers and purchased by resellers, speculators and food industry businesses. This is an example of a “futures market,” in which the sale of a commodity is finalized in a binding legal agreement to buy or sell at a solidified price at a future date, allowing people to speculate how high the commodity’s price will rise and then contract for a lower price.

“You can buy heating oil on paper and not know what it smells like,” Mackin said, later adding, “That all has to do with speculation. It’s ridiculous, is what it is.”

He said President Joe Biden’s orders to release up to 180 million barrels of oil from the nation’s strategic petroleum reserve over a six-month period will likely bring down prices. This would represent the largest release since the reserve’s 1974 creation. Recent reports of the move caused a drop in oil prices, which have been rising particularly high since Russian President Vladimir Putin’s invasion of Ukraine.

Like Mackin, Michael Behn said he has never seen fluctuation like this in the 45 years he has worked for Sandri Companies, where he serves as president and chief operating officer. He said the situation in Ukraine and a tight supply in the United States are huge drivers of the high costs. Sandri’s oil is retailing at $4.89 per gallon, up roughly $2 since this time last year.

Behn said prices are controlled a great deal by brokers with the New York Mercantile Exchange and investors.

“The price gets moved by the minute,” he said. “They’re buying and selling all day long.”

Behn said hurricanes in the Gulf of Mexico cause spikes in oil prices, though they typically level out rather quickly. He mentioned prices will likely drop soon because people use less heating oil as the weather warms up and, like the United States, other countries might release some oil from their strategic supplies.

Pam Harris, who co-owns Orange Oil Co. with daughter Kirsten and son Robert Harris III, said her heating oil currently costs $4.58 per gallon, up $2.10 from June. Her record high, reached a couple of weeks ago, was $4.93.

“It’s been a complete yo-yo,” she said. “It really has.”

Harris said her previous record high was roughly $4.50 per gallon in 2007 and 2008.

She said a major factor in rising prices is Biden’s executive order on his first day in office to cancel the plan for the Keystone XL Pipeline, which was designed to carry 830,000 barrels of oil a day into the United States from Canada.

“Russia, of course, I think, is to blame for some of it,” Harris added. “Also, people are making money. Not us. For sure not us — major companies and investors. Any time there is a world crisis, the price of oil can be played with (by investors).”

Harris and Mackin said the increased prices have not necessarily been detrimental to business, as people need their services to stay warm in the winter, but their customers have definitely been feeling the hit in the pocketbook.

“It’s a very awful thing for customers right now. It really is,” Harris said. “Many cannot afford it.”

She mentioned some customers set up for automatic refills have called to postpone deliveries because they are conserving their heating oil to save money. Mackin said people aren’t necessarily purchasing less heating oil right now; they’re just paying heavily for what they buy.

“You’re asking people to pay almost $1,000 for a delivery if they get their tank filled,” Mackin said.

Some have pointed out these high costs would be less burdensome if Americans reduced their resilience on crude oil in exchange for clean, renewable energy. But Harris said it’s not that simple. She said it is a good idea to make investments in alternative energy sources, but a full transition would cost trillions of dollars. The Yale School of the Environment reported in 2019 that it would cost $4.5 trillion to shift the nation to 100% renewables.

“It’s not feasible,” Harris said of surviving solely on solar and wind power.

Behn agreed that investment in renewable energy is a noble pursuit, but “there’s got to be a balance.”

Reach Domenic Poli at: dpoli@recorder.com or 413-772-0261, ext. 262.


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