ARI SHAPIRO, host:
That gas dispute has helped push up the price of oil. Still, oil is much cheaper than it was for most of last year. That means it will be cheaper to heat homes this winter. In the Northeast, where home heating oil is common, costs could be 25 percent lower compared to last year. But some consumers are not happy with the prices they will be paying. From member station WBUR in Boston, Curt Nickisch reports.
CURT NICKISCH: Fuel oil dealer Eddie Basile is filling the home heating oil tank at a house outside Boston. Basile's thrilled to tell the owner she's getting the lowest price per gallon so far this winter.
Mr. EDDIE BASILE (Fuel Oil Dealer): For you, $2.39.
Unidentified Woman: It's a lot better than I thought it was going to be. It's like a Christmas present.
NICKISCH: It's like a Christmas present because fuel oil cost almost twice as much at its peak back in July. Back then, people were freaking out that costs would climb even higher, so many people bought contracts to lock in the going price at the time. That way if the market rate went up, you'd still be paying the same. Well, it went down.
Mr. KEN GLASSER: Some years you're the dog and some years the hydrant.
(Soundbite of laughter)
NICKISCH: That's a nervous laugh Ken Glasser has got because he's paying $4 a gallon to heat his home in the Boston suburbs, the price he locked in back in August. That's about a buck and a half more than the current market price. And if he wanted to forget that, he can't, because he got 60 other people to join in with him.
Mr. GLASSER: These people are my mother, my sister, and several very close friends and retired people that are friends of my mother, people from church, people from work. So it's not anybody that we want to see get hurt.
NICKISCH: It's making for some pretty frosty conversations. Turns out individual customers are not the only ones burned by fixed-rate contracts this year. The city of Newton, Massachusetts, did the same thing. In fact, it's been buying heating oil at a set price every summer for 10 years now. Jeremy Solomon in the mayor's office says until now, the strategy has always paid off.
Mr. JEREMY SOLOMON (Spokesman, Mayor's office, Newton, Massachusetts): Yeah, I mean, over the course of a decade we saved hundreds of thousands of taxpayer dollars by locking in early and sitting back and watching as the prices go up and the deal gets better and better.
NICKISCH: This year the deal got worse and worse as the prices went the other way. Now the city will have to cough up an extra $1.5 million this winter. Any other year, Solomon says, that would be more manageable, but this year the recession has already cramped the city's budget.
Mr. SOLOMON: You know, in any times such as these, when every nickel counts, this is most unfortunate. It's just a shame.
NICKISCH: But it's also the name of the game, something people are quickly finding out when they try to get out of the contract. Sometimes there is a termination fee, usually pretty hefty. Otherwise they're stuck.
Mr. JIM COLLOURA (Vice President, Government Affairs, New England Fuel Institute): The contract is a contract. It was offered as a service to the customer. It was no malicious intent here.
NICKISCH: Jim Colloura works for the New England Fuel Institute, an association of heating oil dealers. He says his group's members have been getting angry calls from fixed-rate customers. All the dealers can do is deliver the bad news.
Mr. COLLOURA: I got to be honest with you. I think this is a learning curve for everybody.
NICKISCH: It's not just home heating oil. The recession has also lowered natural gas prices. As manufacturers go out of business or take longer holiday breaks, that's giving home consumers a break and making those people who bought fixed-rate gas contracts wish they'd procrastinated. For NPR News, I'm Curt Nickisch in Boston.
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