Supplies of home heating oil are at their second-lowest level in 27 years, according to an oil-buying cooperative, which warned yesterday that oil-heated Washington area households could face higher prices and possible delays in deliveries this winter.
Joan Claybrook, president of Public Citizen's Buyers Up organization, said at a news conference that domestic oil inventories are "dangerously low" and could drop further if there is any disruption of the oil supply in the Persian Gulf.
The group's warning of an impending "heating oil disaster" for consumers was immediately challenged by the American Petroleum Institute, an oil industry trade association, which said supplies of home heating oil "should be more than adequate," even if this winter is exceptionally cold.
"We can produce everything that's needed," said Edward Murphy, the institute's director of finance, accounting and statistics, who called the Buyers Up analysis "silly, misleading and irresponsible."
More than 30 percent of the region's households use fuel oil to heat their homes, said Jason Adkins, director of Buyers Up, who advised consumers to fill their tanks during the next two weeks.
"We don't want people to panic," said Adkins. "But the fact is that the profit-motivated oil industry lets the inventory get lower every year, and the prices go higher."
Short supplies push wholesale prices up and allow retail companies to raise their profit margins. The Buyers Up group, which was founded by Ralph Nader and Public Citizen, said Washington area retail dealers "are particularly notorious" for increasing their profit margins during the winter.
Washington area heating oil prices are the highest in the nation and are up 20 cents a gallon over last year's prices, according to Buyers Up, which said today's average market price is 96 cents a gallon.
In human terms, Adkins said, a Washington family buying 250 gallons of heating oil today will pay $50 more for that delivery than it did a year ago. He said he expects prices to go up another 10 to 15 cents a gallon before the winter is over, an increase that will hit the area's low-income families the hardest.
The Washington Gas Light Co. announced this week that gas bills will be about 9 percent lower this winter than last for the area's 590,000 customers. But oil, according to Buyers Up, should still be the cheapest home-heating fuel for the region's 300,000 heating oil customers.
Buyers Up said demand for distillate fuel oil has risen steadily since 1981 and is currently 3.3 million barrels a day, 9 percent higher than in 1986 and 31 percent higher than in 1984. Yet oil imports, the group said, have been below 1985 levels, when supplies were at their lowest in three decades.
To prevent supply disruptions or rapid price increases, Claybrook said Congress should consider legislation to establish minimum inventory levels for heating oil.
But the petroleum institute's Murphy said the overall heating oil market has been shrinking in recent years, with consumption up just 1.5 percent since last year.