ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Saturday, January 4, 1997 TAG: 9701060032
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
Heating oil prices will remain 10 to 15 cents a gallon higher this winter than last year largely because of strong demand in the United States and Europe, the Energy Department said Friday.
The department also said that 1997 gasoline prices likely will remain about the same as they were during the peak summer driving months last year.
Assuming normal weather for the first quarter of the year, average heating oil prices are expected to be about $1.06 a gallon, 10 cents higher than the same period a year ago, said the department. If there is a colder winter, prices could rise 15 cents from last year, it added.
Jay Hakes, head of the DOE's Energy Information Administration, said there are increased supplies of both heating oil and diesel fuel. But prices are unlikely to ease because of high demand, especially for diesel fuel, because of the strong economy.
Heating oil prices during the fourth quarter of 1996 averaged $1.05 per gallon, 16 cents higher than in the fourth quarter of 1995.
``There's a lot of uncertainty in this market,'' said Hakes. He said a cold winter in Europe that caused strong heating oil demand there also has kept prices high in the United States.
Hakes attributed the continuing high cost of both gasoline and heating oil to higher-than-expected crude oil prices and the industry's policy of keeping inventories low in anticipation of lower crude prices in the future.
``Crude oil stocks last week were at a historic low,'' for this time of year, said Hakes. ``One way of reducing costs (for oil companies and refineries) is by reducing inventories. That may be a long-term issue.''
The EIA estimated that crude prices in 1997 and into 1998 will average $21 to $21.50 a barrel, about $2.50 more than previously forecast.
While people, especially in the Northeast, face higher heating oil prices, motorists across the country are likely to see continuing high gasoline prices due to tight inventories and high demand.
Hakes said gasoline stocks are lower than normal. The department predicted that during the peak driving season this summer, gasoline likely will be about what it was last year on a nationwide average - about $1.36 to $1.38 a gallon.
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