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With Oil Prices On The Rise, Winter May Be Expensive

Wednesday, August 25th, 2004

Summer isn’t the usual time to ponder home heating bills, but with the price of oil continuing to break new
records, now may be the best time to think about how you’re going to pay for higher heating costs this winter.

The average cost of a gallon of fuel oil this season is expected to run about $1.65, compared to $1.35 last
year, according to the Independent Connecticut Petroleum Association.

Crude oil has soared more than 40 percent this year, and industry experts attribute the rise in prices to a host
of factors, ranging from escalating worldwide demand to a continuing U.S. economic expansion and fears
about terrorism and the war in Iraq. In addition, some have said that investment speculators have also helped
boost the price. The bottom line is that as oil prices march higher, so will your costs for gasoline, diesel fuel
and home heating oil.

“The number one factor affecting the price is the cost of crude oil,” said Ron Planting, an oil analyst with the
American Petroleum Institute in Washington, D.C. “Last September, oil was going for about $28 a barrel. Last
week, it hit $49 a barrel. And since we import about 60 percent of what we use, what happens on the world oil
markets has a big influence on what we experience here.”

The record high price this year for a barrel of crude oil (which holds about 42 gallons) is $49.40, the highest
price in more than 20 years of oil futures trading on the New York Mercantile Exchange. Oil prices this week
did ease a bit from last week’s highs, declining for the third straight day to below $46 a barrel as Iraq boosted
its flow of oil to world markets.

Economists have warned that if oil prices don’t ease from their historic highs, the national recovery could be in
jeopardy as spiraling energy costs begin to raise costs and erode profits for businesses large and small and
rob consumers of their discretionary income. Several investment firms have forecast that oil prices will stabilize
this year around $40 a barrel.

In the meantime, industry experts are encouraging consumers to consider energy conservation steps, such as
added insulation, weather stripping and energy-saving windows, and to consider setting up special budget
plans or pre-payment plans with their local fuel oil providers, which typically lock in a price at the beginning of
the season before prices escalate further.

Rising oil prices are also worrying municipalities and social service agencies in the region that help those of
limited income pay for home heating oil.

“When fuel costs rise, people have a difficult time,” said Ann Grabow-ski, a program manager with Catholic
Charities and Family Services, which serves the diocese of Norwich. “This will have a very large impact on the
clients that we serve. They will apply their money to pay the rent first and put food on the table, and they
sometimes let the utilities (and oil bills) slide, and then they’re left with very large bills.”

Naomi McClure, a senior social worker with the town of Groton’s social services department, said there are a
number of programs available locally to help those in need, including senior citizens, but the funds aren’t
plentiful.

“I don’t know what we’re going to do with oil prices rising. We’ll just have to wait and see,” McClure said. “I’ll
use everything I possibly can” to help the needy, she said, including municipal programs, regional social
service programs provided through groups like the United Way and the Thames Valley Council for Community
Action and utility-sponsored programs such as the statewide Operation Fuel, which dispensed $842,000 over
the past two years to more than 12,000 needy individuals. McClure estimated that her municipal agency helps
several hundred each year with some form of heating assistance.

U.S. Sen. Christopher J. Dodd, D-Conn., said the Senate this past year passed a bipartisan energy bill
designed to help consumers by increasing production and the development of new sources of energy,
including solar, wind and geothermal technologies, but the legislation has been blocked by opponents. “We
hope that the president and his allies in Congress will think again about this issue and decide to support the
legislation the majority of us supported last year,” he said.

Dodd said Congress should also ensure that the Low Income Home Energy Assistance Program, a federally
funded program that helps eligible low-income households meet their home heating needs, is fully funded this
year in light of predictions of escalating fuel bills.

The Independent Connecticut Petroleum Association, which represents more than 425 gasoline and heating oil
dealers, said in its annual fall energy outlook that consumers should be prepared for “what shapes up to be a
more expensive heating season than last year.”

“We see energy prices rising across the board in the electricity, natural gas and oil sectors due to political
factors relating directly to fear created by activities in the Middle East and Iraq,” the petroleum association said in its annual energy report.

The trade group also said the recent spike in prices shouldn’t be attributed to problems with supplies. “In fact,
heating oil inventories and natural gas inventories are well within normal ranges given the time of year,” it said.
“We will have an ample supply of heating fuels as we go into the coming winter heating season.”

While experts agree that supply isn’t a problem, at least not now, they do point the finger at growing demand.
This year’s unabated rise in oil prices is attributable to the growing global thirst for oil  to do everything from
power automobiles to energize booming factories. Most of the global growth, in fact, is occurring in Asia, where
countries like China are burgeoning as oil-consuming factories churn out a wealth of products and cash-rich consumers there buy automobiles en masse.

And because we live in a global economy, that worldwide demand ratchets up prices here in eastern Connecticut, where consumers have already become resigned to gasoline around $2 a gallon.

Even though it’s still August, some in the fuel-oil industry are counseling consumers to consider pre-paying for
their heating oil this year, or at least signing up for a budget plan that allows the consumer to pay a set price for oil that is spread over 12 months, avoiding paying large bills during the heaviest months of use.

The pre-payment option, while requiring more money up front, calls for consumers to pre-pay at a set price for
their oil use for the season. Those prices typically are cheaper than if the consumer pays on a monthly basis or
if they pay each time they fill up their oil tank.

Mark Mazzella of the family-owned Benvenuti Oil Co. in Waterford said homeowners should consider such
options this year because of the rising cost of fuel oil. He said the 54-year-old fuel oil company has been
offering a pre-paid plan for about a decade and it’s proving popular with some of its customers, especially this
season as prices continue to escalate.

“Some of our customers say, ‘What if the price drops during the season?’ but that hasn’t happened yet,”
Mazzella said.

The heating oil dealer said that his customers no longer point the blame on the local fuel providers. “They
understand,” he said, adding that the rising prices also affect how much he pays for oil for his fleet of five
trucks, which each carry about 2,500 gallons of fuel.

Mazzella said that last year at this time, a gallon of home heating oil cost about $1.29. Today, that same gallon
can go for as much as $1.65 locally. “And if gas is going up, you can bet that home heating is going up,” he
said, since both come from the same fuel source.

Staying Warm This Winter May Be Costly As Heating Bills Are Expected To Rise

Saturday, October 18th, 2003

After being bankrupted by last winter’s weather, you’re trying to guess how much to budget for this winter’s
heating bills.

So you turn to the forecast released Thursday by the National Oceanic and Atmospheric Administration: This
winter, they say, may be colder, warmer or much the same.

Some help.

To which Mel Goldstein, a meteorologist with WTNH Channel 8, said, “Now you know where your tax dollars are going.”

So what does “Dr. Mel” think?

“I’m not ready to count the width of the stripe on the woolly bear yet, but early indications are that it may be
colder,” Goldstein said. “So far for the month of October, we’re averaging one and a half to two degrees colder
than normal right now, so if that pattern is sustained into the first half of November, I’d say be prepared for
some pretty good heating bills.”

That’s not good news for Connecticut, particularly if you’re heating with gas.

Dave Costello, an economist with the federal Energy Information Administration, said Thursday his agency is
forecasting natural gas prices will be about 9 percent higher this winter than they were last year, and that’s if
we just have a normal winter.

If things get really nasty, like they did last year, count on gas prices to go even higher.

Aside from the pressure exerted on prices by higher demand, gas companies had to make up for depleted reserves, and when they did, they had to pay higher prices for the gas they bought.

“The utilities were paying a lot for gas over the summer,” Costello said. “They put a whole lot of gas in storage
this year at a very high cost, and much of those costs are going to be reflected in the bills this winter.”

Costello’s agency is predicting that the average gas customer will be paying about $42 more this season to
heat his or her home.

Even if we have a normal winter, Costello said, we may still end up paying about the same amount we paid last
winter, because gas prices are so much higher.

Three factors conspired to raise prices, he said: the cold, a tight oil market, and a decline in nuclear power.

“All those things pushed up the demand for natural gas,” Costello said. “And that left us in a deficit situation
that had to be made up, and that usually has an impact on spot prices for the summer.”

Mary Ingarra, a spokeswoman for Yankee Gas, which serves about 191,000 customers statewide, said her company had to pay $4.75 per thousand cubic feet for gas this summer, compared to $2.50 to $3 the year before.

“Unfortunately,” said Ingarra, “that increase is passed on to the customers.”

There are steps customers can take to lower their gas bills, Ingarra said. There are payment programs to spread out the cost of gas over the year, and, for people who simply cannot afford the full cost, a matching payment program for low-income customers.

Yankee and Connecticut Light and Power are working with social service agencies around the state to ensure that no one is without heat this winter, Ingarra said. Persons who need help in paying their bills should call Info
Line at 211, which will put them in touch with their local social service agency, she said.

As to the price of home heating oil, the news is somewhat better.

“Going into the fourth quarter of this year, oil prices are relatively high,” Costello said. “OPEC has announced
that beginning Nov. 1, it’s cutting back production, so that will keep prices high.”

The Energy Information Administration predicts that home heating oil will cost in the vicinity of $1.33 a gallon if
it’s a normal winter. Of course, if it’s a tough winter, that price will go higher.

Which is why oil dealers all tout their plans to lock in the price or “pre-buy” your oil.

“People can lock in at a price, and this would protect them in case there’s any type of spike,” said Rick Pothier,
sales manager for Eastern USA Fuel Inc., which serves New London and Windham counties.

Most people lock in a price in May, he said, and those that did are getting their oil about 15 cents a gallon
cheaper than the price right now, which is $1.32.9.

Mark Mazzella, one of the owners of Benvenuti Oil Co. Inc. in Waterford, said about half of his customers prebuy
their oil, and “all the oil we pre-sell, we pre-buy, that’s how we sleep at night.”

Not surprisingly, Gene Guilford, the executive director of the Independent Connecticut Petroleum Association,
said that even at $1.33 a gallon, home heating oil is a better bargain than natural gas.

The price of a “gallon” of Yankee natural gas, he said, would be $1.66.

Even worse is the cost of heating with electricity. Guilford said there are 25,000 electric heat customers in Connecticut who are paying the equivalent of $4.19 a “gallon” from CL&P.

As to predictions of prices to come, Guilford said, “I worked at the Department of Energy a long time ago and I
have great respect for the Energy Information Administration, and I think very intelligent, well-meaning people
are trying to read the tea leaves and make a good-faith estimate based on assumptions.

“But when it comes to what is a gallon of heating oil going to cost next March, I could more easily tell you what
the Dow Jones is going to be next March. And if I could tell you that, I wouldn’t need this job.”

Oil Prices Become A Concern As Winter Nears

Wednesday, November 1st, 2000

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.”

Locally,Cost Of Heating Oil Varies Widely

Wednesday, November 1st, 2000

In an informal survey Tuesday, oil dealers around southeastern Connecticut quoted retail prices ranging from
$1.18 a gallon under a special program to $1.48 a gallon for next-day or later delivery.

Homeowners, business owners and other heating-oil consumers should take heed.

Prices in this survey swing as much as 25 percent, depending on location; purchase plan, if any; the dealer’s
own overhead costs, and a lot more. Some dealers suggested that retail customers get the best price from independent oil distributors that have few employees, a small territory and don’t service oil burners.

Other dealers said customers should never buy from a heating-oil company that does not offer service.

At both Bernie’s/All Aboard in New London and Benvenuti Oil Co. of Waterford, customers can buy into special
discount programs that can cut oil expenditures by 10 percent or more. Jeff Suntup, owner of Bernie’s and All
Aboard, said that a Bernie’s customer will pay $1.39 a gallon for a special same-day delivery, but if someone
phones for a delivery in the next day or two, he or she will pay $1.29.

At Suntup’s sister company, All Aboard, if a customer signs up for a regular neighborhood delivery program,
the oil costs $1.25 a gallon for a minimum delivery of 150 gallons. Another program at Benvenuti allows
customers to pay a one-time charge of $1.18 a gallon if they buy enough oil for at least six months. Before
discounts, Benvenuti charges $1.52 a gallon, but the company doesn’t offer cash-on-delivery purchases.

Andersen Oil Co. of Ledyard is selling heating fuel for $1.33 a gallon under a next-day delivery, C.O.D. plan.
Under the same plan, Phoenix Oil Co. LLC of Stonington is selling oil for $1.34 a gallon.

In Oakdale, a section of Montville, Viking Fuel Co. is selling heating oil for $1.30 a gallon, also under the
C.O.D. next-day delivery program, but crosstown in Montville off Route 32, Williams Oil/The Heat People are
selling the same gallon for $1.45.

It’s $1.48 a gallon at Guy’s Oil Service Station in Niantic, under the next-day-delivery C.O.D. plan, the same
price as at Eastern U.S.A. Fuel of Norwich. But at Ed’s Garage Inc. of Canterbury and Norwich, that gallon of
home heating oil costs $1.43.

Mohegan Oil and Densmore Oil, both of Mystic, declined to provide per-gallon retail oil prices in the phone
survey Tuesday.