Heating oil prices are up because of expensive crude oil, which accounts for about 70 percent of the cost for making this fuel.

“Crude oil prices are likely to continue as the primary driver of heating oil prices. If the world experiences a period of weak economic growth, crude oil supply could potentially outpace demand and drive down prices this winter,” the EIA said.

EIA, the Energy Department’s analytical arm, said the highest retail price paid for home heating oil was in the District of Columbia at $4.04 a gallon. The next highest prices were in Maryland at $3.83 a gallon, New York at $3.80 and North Carolina at $3.79.

The lowest price for heating oil was in Kentucky at $3.48 a gallon, followed by Ohio at $3.50 a gallon, Nebraska at $3.51 and Maine at $3.53.

The EIA estimated that the average heating oil price in the Northeast, the biggest U.S. heating oil market, will be $3.90 a gallon this winter, up 59 cents from last year.

And with this winter forecast to be colder than last year’s, heating oil costs for the average household in the region will be $2,468 which would be up 24 percent from $1,987 last winter, the agency said.

“Steeper prices combined with colder weather could put a serious dent in many household budgets,” the EIA said.

About 7 percent of all U.S. households use heating oil, but 46 percent of the homes in the Northeast depend on it as their primary heating fuel.

In a separate report on Wednesday, the EIA said U.S. heating oil inventories totaled 37.7 million barrels at the end of last week, up 400,000 barrels from the week before, but down 5.7 million barrels from a year ago. (Reporting by Tom Doggett; Editing by John Picinich)
Copyright 2008 Reuters, Click for Restriction

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