The heating oil market under pressure even before the winter peak

The Northeast is so short of fuel oil that the fuel used to power domestic ovens is rationed even before the start of winter.

According to Chris Herb, president of the Connecticut Energy Marketers Association, which represents about 600 family retailers in the state, some Connecticut wholesalers put retailers on allotment, which means they can only get a limited amount of fuel in depending on availability. These retailers in turn have to ration their customers.

The measure, designed to prevent panic buying, highlights the extreme fuel shortage in the New York Harbor and New England regions that has caught the attention of the White House.

National Economic Council Director Brian Deese told Bloomberg Television last week that diesel inventories were “unacceptably low” and that “all options are on the table” to increase supply and reduce costs for consumers.

In New England, where more people use fuel oil to heat their homes than anywhere else in the country, inventories are at a third of typical levels for this time of year, according to government data.

One of the major impediments to rebuilding regional fuel supplies has been a sharp and sustained decline in the diesel market.

Backflushing occurs when prompt deliveries are priced at a higher price than future deliveries, which actually causes the product to lose value over time. “There’s just no incentive to stockpile large amounts of produce,” said Michael Ferrante, president of the Massachusetts Energy Marketers Association.

In addition to rarity, there is also cost. Wholesale heating oil in New York Harbor averaged $4.09 a gallon on Thursday, down from $2.46 in the same period a year ago, agency data showed. Argus Media price assessment. For the wholesaler, that means it costs about $1,125 to fill a 275-gallon heating oil tank, the typical size used in many homes.

Consumers will pay far more than this figure after wholesaler and retailer markups.

Many people are “shocked” when they hear the price to fill their fuel oil tanks, said Sam Livieri, vice president of Apple Oil, a fuel oil supplier in the New Haven, Connecticut area.

Many of its customers opt for partial fills and some say they don’t plan to turn on the heat until absolutely necessary.

“We are praying, and I mean it, for a warm winter,” he said.

There is ongoing supply relief.

A full colonial pipeline and overseas shipments are heading to the region, which should also help lower prices in the near term. Longer term, the squeeze on global supply could worsen the diesel crisis as the cold winter months set in and European sanctions kick in.

Carol N. Valencia