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Originally published July 31, 2008 at 12:00 AM | Page modified July 31, 2008 at 1:36 PM

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Consumer Affairs

Heating-oil customers facing difficult choices are eyeing other energy sources

Homeowners and renters with oil furnaces are getting socked with some hefty bills as heating-oil prices stay well above $4 a gallon. Oil marketers say the long-standing advice on when to fill up tanks for the winter may no longer apply, but they say help may be on the way.

Seattle Times staff reporter

It's 80 degrees out, but Ken Suzuki is already thinking about winter.

Six months ago, Suzuki paid $1,200 to fill the oil tank that feeds the furnace in his Magnolia home. At current prices, he expects to pay at least $300 more to stay warm this winter.

"What choice do I have? I have to have heat in my house," Suzuki, 35, said. "I pay what I'm told."

Homeowners and renters who have their oil tanks automatically filled are experiencing their own sticker shock this summer, with bills twice as high as last year's for oil that won't be used for months. While dealers report that most customers have been understanding, it's created some friction in an industry that competes largely on customer service.

An estimated 90,000 Washington homes have oil furnaces. Owners and renters of those homes are facing tough choices as the price of heating oil hovers at about $4.50 a gallon. Some are canceling "automatic fill" contracts with suppliers to gain more control over when they pay for oil. Others are opting for payment plans to spread the pain, while still others are exploring new sources of heat, including natural gas and electricity.

"We invested in little portable electric oil heaters," said Megan Tully, 35, a renter in Ballard who was hit with two $600 oil heating bills last winter. "We're going to see how long we can get by without turning [the furnace] on."

For those sticking with oil, the decision on when to fill the tank has never been more confusing, said Lea Wilson, executive director of the Washington Oil Marketers Association.

"The volatility we're seeing now is unheard of," Wilson said. "We used to see one price change a day, and never more than a penny one way or the other. Now there's three changes a day, and we see 15- to 30-cent swings in a day."

That means customers who call in the morning may get a different quote from the one they would get if they called the same company later in the day, she said. It all depends on the price being charged at the terminal when the companies order their oil.

Fluctuating prices mean that long-standing seasonal advice to consumers on when to fill up or top off tanks may not apply this year, Wilson said.

Historically, the best time to buy home-heating oil is the summer, when large supplies and low demand have lowered prices. The worst time is the winter, when the opposite has been true.

"Normally, I'd say, wait until August when the price really drops," Wilson said. "I would never dole out that advice right now."

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Marketers are hoping their lobbying efforts will curb speculation in the commodities markets and quickly lower oil prices.

Unlike commercial investors who take possession of the oil they buy, speculators are essentially betting on the price of oil as an investment. Federal lawmakers are considering more than a dozen proposals to curb speculative trading in the commodities markets where oil is traded, even as the debate continues over whether speculators or global demand for oil is primarily to blame for soaring prices.

If the marketers are correct — and unbridled speculation is driving oil costs to new highs — prices should drop by curbing it. But there's no guarantee prices will drop or stabilize for companies and their customers.

Consumers can take advantage of savings — sometimes as much as 40 cents a gallon — by scheduling deliveries of larger quantities of oil at least a week or 10 days before it's needed. For example, on Tuesday, customers who ordered at least 175 gallons from Ballard Oil 10 days in advance of delivery paid $4.38 a gallon. The charge for same-day delivery of at least 100 gallons was $4.78 a gallon.

Despite the price increases, anecdotal evidence suggests customers haven't defected in droves to other energy sources, and heating-oil resellers are working to keep it that way. They know that once customers convert to natural gas or forced-air electric heat, they're gone for good, Wilson said.

About 80 percent of the homes in Washington with oil heat are west of the Cascades, with the largest concentrations in King, Pierce and Thurston counties. Most of the oil-burning furnaces in the state were installed in the '50s and '60s, and annually burn an average of 750 gallons to heat a typical three-bedroom/two-bath house, according to Puget Sound Energy.

At $4.75 a gallon, Seattle City Light estimates that average oil customers will pay between $1,462 and $2,315 a year for heating, depending on their furnace's efficiency. Natural gas customers will pay between $461 and $730 annually, while customers with electric furnaces will pay about $1,023 annually. Those with electric heat pumps will pay between $409 and $511 a year.

The companies that deliver oil in the Puget Sound area are mostly mom-and-pop businesses with long-standing relationships with customers. It's a competitive business, and many of the companies, on occasion, have sold oil for less than they bought it in an effort to insulate customers from wide price swings, Wilson said.

The auto-fill contracts are based on computer models that track the daily temperature and the home's historic use of oil to determine when the tank needs refilling.

Jerry Hoefer, co-owner of Glendale Heating and Air Conditioning, said he's been advising customers to conserve as much energy as they can by insulating homes, tuning up furnaces and upgrading to high-efficiency oil furnaces when possible.

"It's summer, so we're not hearing much right now," Hoefer said. "I don't think our customers are angry. Everybody out there knows it's not us. It's just amazing how things that happen in the far reaches of the world can affect us here in Burien."

Susan Kelleher: (206) 464-2508 or skelleher@seattletimes.com

Copyright © 2008 The Seattle Times Company

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