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Oil Prices Become A Concern As Winter Nears

Charlotte Hennegan of Waterford pays her home-heating oil bill once a year  in the summer, before higher
demand boosts prices.

Hennegan, who owns the Thames River Greenery floral shop in New London, said her oil distributor, Benvenuti Oil Co. of Waterford, offered her a plan through which she makes a one-time payment in August or September that covers the company’s estimates of her oil use for the year. The new one-time payment plan  which includes automatic monthly delivery  seemed the best way to save on home-heating oil costs, she said.

“It wasn’t over a dollar a gallon in September or August,” Hennegan said of the price she paid per gallon. “I
have a small house. To pay a year’s worth at once is not out of my budget, and then I don’t have to be a victim
of high prices throughout the rest of the year.”

Hennegan is one of many residents, business owners and property managers in southeastern Connecticut searching for ways to cut their oil bills this winter. Predictions of significantly higher heating costs this season  which started at the beginning of October and ends in April  are based mainly on the fact that oil inventories are far below normal, according to the Energy Information Administration, a division of the U.S. Department of Energy.

The division said that prices for crude oil, from which home-heating oil is refined, rose from a monthly average
of $23.80 in September ’99 to $33.88 a barrel this past September, an increase of 42 percent.

“Fuel prices this year are expected to remain well above year-ago levels,” the division said. And on the retail
side, area oil dealers also boost their prices in tandem with these increases. As oil prices rise, dealers’ profit
margins erode, both from paying more for wholesale heating oil and for gasoline  whose price also increases
as crude oil prices jump  for their delivery trucks.

Barry Levinson, a New London resident who owns Roberts Audio-Video in downtown New London, buys heating oil for both his store and the family home from Home Heating Oil Partners, a Darien-based partnership with a broad local presence. He has a plan similar to Hennegan’s, and has aimed to cut costs at his shop by installing a new heating system.

“We upgraded and now we use (heating) ducts instead of radiators,” Levinson said. “It’s much more efficient.”

Across the region, many apartment-complex managers and owners are gritting their teeth as they look at
falling mercury levels. A large number of properties include the cost of heat and hot water in a tenant’s rent.

Paul Connor, a partner in Steamboat Wharf Co. of Mystic, said the company is trying to promote conservation by tenants. No surprise, really, as the company owns the Gilbert Building and Steamboat Wharf Building, two apartment buildings with first-floor commercial operations in downtown Mystic, and the Steamboat Inn and Whalers Inn, two small inns also in Mystic, and all four properties are heated by oil.

“We wrote a letter to all our tenants,” Connor said, asking them to install storm windows and take air
conditioning units out. “That’s pretty much all we can really do.”

The company does get some price discounts, a fixed rate over the wholesale price at the Hess distribution
terminal in Groton, because it buys for four properties.

Connor said he doesn’t expect the company to raise rents to make up for higher oil costs  at least for now.

“We’re trying to avoid that,” he said. “If a year from now it’s just godawful and we’re paying $3 a gallon, we
might have to think about adding a surcharge. But we’d have to get a year behind us to see how badly we’re
affected.”

The company also hasn’t raised room rates at the two inns.

“That’s one of those things you have to swallow,” Connor said of heating costs. “At least for the time being.”

Connecticut College in New London is considering various ways to save on heating costs. Some of the college buildings are heated by natural gas, others by oil, according to Trish Brink, college spokeswoman. Among them are making bulk purchases of oil and storing reserves in the couple of tanks the college has on campus, Brink said.

“We’re researching different methods,” she said. “Meanwhile, we’re monitoring the markets on a daily basis.”

Fred Brunstetter, vice president for administrative services at Mitchell College in New London, said the twoyear
school has few opportunities for cost savings. Most buildings on campus have been modernized as much as possible, and the college is trying to save in other, smaller ways by setting back thermostats, reducing lighting use and stopping cold air from coming indoors. Spokeswoman Renee Fournier said the college’s heating budget has doubled over last year’s.

According to the federal energy department, Connecticut’s average retail price per gallon as of Nov. 1, 1999,
was 99.8 cents. Most recently, it totaled $1.505 per gallon, an increase of more than 50 percent from year to
year.

“It’s hard to do anything about it,” said Tammy McPartland, resident manager at Squire One apartments in New
London, of the heating-oil cost increase. “We provide heat and hot water (to tenants). We’ve wrapped our air
conditioning sleeves and done as much preventive maintenance as possible, but unfortunately that’s the extent
of it.”

McPartland said the property likely will not change over to natural gas or electricity anytime soon because the
modification would be too costly to make financial sense. Raising tenants’ rates is a future consideration, she
said. “It’s always a possibility, but there’s no way to know at this point,” she said.

But there’s a bright spot connected with high-priced home-heating fuel, McPartland said.

“It keeps us full,” she said of the 171-apartment complex, which includes heating costs in the rent. “Tons of
people are coming to rent the apartments, and they’re staying.”

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