Washington, D.C., Area Home Heating Oil Supplies Adequate But at Escalating Prices

Since U.S. crude oil supplies fell early in 1979, observers have been concerned about whether sufficient home heating oil would be available for the 1979-80 winter and whether needy people would be able to afford the price. A request was made for an evaluation of heating oil availability and its escalating prices in the Washington, D.C. metropolitan area.

Home heating oil supplies for the Washington area should be sufficient to meet the needs of consumers during the winter. While the Iranian oil cutoff in early 1979 diminished many refiners' stocks, the stocks were rebuilt during the summer and in October 1979 they were 5 percent over the October 1978 level. Nationally, since price decontrol in 1976, residential heating oil prices rose 111 percent as of August 1979, with 58 percent of the increase occurring since January 1979. Prices in the Washington area are about 4 cents a gallon higher than the national average price, principally because one wholesaler which supplies 20 percent of the area's oil bought his oil on the spot market at exceedingly high prices. Although Congress appropriated $1.6 billion to help low income people meet energy costs this winter, a Department of Energy (DOE) study concluded that $3.2 billion would be needed. The study has not determined whether a direct-subsidy is the best long-term approach to the problem. The DOE response to escalating heating oil prices has been inadequate and particularly distressing in view of the severe economic hardships high energy bills pose. DOE has not implemented a recommendation by its Office of Hearings and Appeals to conduct a series of studies to determine the extent to which workable competition exists in the refinery sector of the heating oil industry.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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