Good news for consumers

Hundreds of thousands of Mainers have been rejoicing at steadily falling prices of gasoline and heating oil as petroleum supplies around the world continue to exceed demand. Nobody can predict with accuracy how long the current situation will continue. Most analysts believe that higher prices will return over the long term.

Recently, motorists in Maine are paying an average of less than $3 per gallon for gas. While that’s still above the national average, it’s about 40 cents per gallon less than at this time last year. With winter coming on, the energy price respite – however temporary – is especially welcome for the more than seven in 10 Maine households using fuel oil as the primary source of energy for home heating. That’s a higher share than in any other state, according to the U.S. Energy Information Administration. The Governor’s Energy Office reports that the average cost of home heating oil in Maine is now at a two-year low, with an average cash price of $3.03 per gallon. That’s 49 cents a gallon lower than the average price of $3.52 per gallon at the same time last year. As a result, consumers should see an average savings of $134.75 for a 275-gallon tank fill-up.

Maine’s federal Low Income Home Energy Assistance Program allocation has not yet been determined for the coming winter, but those dollars, whatever the amount available, will stretch further because assistance is based on need, not the current price of oil.

Mainers gradually have been moving away from oil as their number one source of heat, with a drop of 26 percent since 2007, according to the Energy Office.

The dip in heating oil and gasoline prices contrasts sharply with the higher electricity prices that are expected to hit small and medium-sized businesses in January and residential customers in March, when new standard-offer rates go into effect. Those higher rates will be driven largely by higher natural gas prices, a result of insufficient pipeline capacity between Massachusetts and Maine.

How long the lower oil prices will last depends on many complex factors. While oil production has increased sharply here in the United States in recent years, the country remains tied to the global oil market. And the fortunes of other oil-producing nations have direct bearing on what happens here. “Their crises are our crises,” wrote Sharon Burke, a former assistant secretary of defense for operational energy, in a recent commentary for CNN. Burke noted that the breaking point in oil prices may be at hand for several nations where oil income has been propping up embattled central governments – Iraq, Libya, Nigeria, Venezuela and Mexico among them. Increased instability in those countries could be “bad news for U.S. national security but also for the American consumer,” she said. “This is the cruel full circle of the global oil market: unrest provoked by low oil prices in these countries can run prices back up.”

But for now, Mainers, like millions of folks across our nation, are getting a break at the gas pump and in their heating oil bills. Prices for propane, a product of the crude oil refining process, also should trend lower.

As so many segments of our economy have recovered slowly from the recession, that is good news for as long as it lasts.

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