Oct 22, 2008 7:44 pm US/Eastern
Locked-In Consumers Upset Over Oil Price Decline
Many Westchester Residents Are Paying A Lot More Than Going Rate; County Exec Spano Tries To Intervene
WHITE PLAINS, N.Y. (CBS) ―
The price is not right for homeowners who locked in a rate for home heating oil this summer. Some locked in around $5 per gallon, when crude oil was at its peak.
Now, crude and heating oil are way down, and homeowners are feeling burned.
Julie McGuinness and Marge DePaso are White Plains neighbors who made the same mistake.
They both signed contracts for home heating oil last summer, agreeing to pay close to $5 per gallon.
"I thought to myself a few weeks ago, why was I so stupid? But they made it sound like either you lock in or you won't get your fuel oil," DePaso said.
"Stupid" is a harsh word, but that's how some feel, given the dramatic drop in the price of home heating oil.
In July, as crude oil peaked at $147 a barrel, heating oil was going for $4.50 a gallon -- and up.
But now crude is down to around $70 a barrel and heating oil has fallen sharply to $2.70 per gallon on average.
"They saw this thing soaring and they wanted to grab a number because they were afraid if it got higher, they'd be killed," Westchester County Executive Andy Spano said.
Spano said consumers need help, so he's written to dozens of heating oil companies, asking them to renegotiate contracts when possible.
"Nobody held a gun to these consumers' heads and said you have to do this, there's no alternative," said Doug Brown of Alliance Oil Co-Op. "Consumers obviously were concerned oil might go to $200 a barrel, heating oil to $7 a gallon this winter."
Brown said fuel companies are also feeling burned. They contracted to buy oil at those higher prices, too. Most oil companies are comprised of human beings. They're willing to work with their consumers.
McGuinness found that was the case. Her company renegotiated down to $3.89 a gallon.
DePaso is going to call her provider this week.
The fee to cancel a fixed-price contract is typically around $400. Westchester County is asking oil companies to consider reducing that fee.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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