Last week’s surge in petroleum markets has intensified a five-month assault on the typical Maine household’s energy budget, boosting prices in an oil-heated home with two cars by $1,417 a year since early September.

Overall, those hikes have increased the annual statewide cost of fuel oil and gasoline by roughly $653 million, figures show.

Most of this money leaves the state, much of it going to other countries.

These estimates are drawn from figures compiled by the Maine Sunday Telegram to illustrate the impact of rising petroleum prices on residents and the economy. They were reviewed by economists and AAA Northern New England.

The estimates were calculated as unrest in the Middle East was sparking a sudden surge in petroleum prices. Speculation about how the situation might influence worldwide supplies helped push a barrel of crude oil last week to $100, the highest level since the sharp spikes of 2008. Crude oil in the $100 price range translates to heating oil and gasoline at roughly $4 a gallon.

Rising wholesale prices now are causing daily jumps at the retail level. Regular gasoline shot up 6 cents a gallon from Thursday to Friday, to $3.33.

Compared to prices early last September, the typical two-vehicle household is paying $825 more per year at the pump. Assuming the number of homes with two vehicles that have average fuel economy and annual travel, the price change has totaled $412.5 million annually.

A prolonged period of $4-a-gallon gasoline and heating oil would drain hundreds of millions of dollars from Maine’s economy, which is especially dependent on petroleum. More than seven in 10 Maine homes burn oil for heat, and 77 percent of workers commute alone by car, according to the latest U.S. Census survey.

An example of the potential impact: If gasoline averaged $4 a gallon for a year, a typical two-car household using 1,250 gallons would spend $5,000 a year to fill up.

CHANGE ‘ENERGY CULTURE’

Energy prices change daily, but state officials and experts say Mainers should begin preparing now for the likelihood of a year of high energy costs.

Take the opportunity to change your family’s “energy culture,” suggested John Kerry, the state’s energy director. Drive less and share rides. Weatherize and boost efficiency. Plan now for the next heating season.

“This has become a year-round sport, if you will,” Kerry said.

Maine burns roughly 1.6 billion gallons of petroleum a year, most of it in the form of gasoline and diesel fuel.

The statewide average for regular gasoline was $2.67 a gallon in early September, according to AAA. It climbed to $3.33 last Friday.

Diesel fuel already is flirting with the $4-a-gallon mark. The average diesel price last Friday was nearly a dollar higher than a year ago, at $3.85 a gallon, a distressing sign for truckers.

But few Maine motorists are likely escape $4-a-gallon gasoline this summer, AAA Northern New England predicts. Gasoline prices typically see a “spring rally” as driving increases. Except for 2010, summer pump prices have increased from their winter lows by at least 56 cents a gallon each year since 2006, records show.

DRAIN ON THE ECONOMY

Beyond gasoline, heating oil accounts for the largest petroleum demand in Maine, more than 300 million gallons a year.

Fuel oil prices were relatively low when the heating season began last September. The statewide average stood at $2.56 a gallon, according to the weekly energy office survey. By last week, the average price had risen to $3.37. Compared with early last September, the average oil-heated home and business have seen average annual costs rise by at least $592 from the start of the heating season. Based on the number of Maine homes with oil and average consumption, that price change totals $240.6 million a year.

Another hike is expected this week, when the next statewide survey is released.

These price hikes probably aren’t severe enough to derail the fragile economic recovery, according to Charles Colgan, a University of Southern Maine economist and forecaster, but they could slow job growth and consumer spending.

“The big effect is to drain money out of the United States and Maine economies that would otherwise circulate and support other activities,” Colgan said. “With the economy as weak as it is, this is not welcome news.”

One brighter spot for the household energy budget is the price of electricity. Depressed natural gas prices for power plants, and a scheduled drop in distribution costs, are actually lowering total electric rates. A typical Central Maine Power Co. home customer paying $81 a month will see that bill ease to around $78 in July, when distribution rates change.

But electricity generally is the smallest piece of the energy budget in a typical Maine household. Heat and transportation have far larger impacts, which are magnified in homes with lower incomes.

HOUSEHOLDS TAKE A HIT

The financial hit from rising heating oil prices on poor Mainers was highlighted in a recent white paper report circulated by William Strauss, president of FutureMetrics, a renewable energy consulting firm in Albany Township.

Strauss is a founder of a business that sells wood-pellet boilers, and is involved with promoting wood fuel. Using the most-recent Census data, Strauss showed heating oil costs as a percentage of income, if oil reaches $4.50 a gallon.

The analysis found that the poorest Mainers, roughly one in 10 residents, would spend half their gross income on heating oil. The largest group of residents, roughly six in 10, would spend 13 percent of their income on heating oil.

This estimate omits the impact of gasoline. Combining gasoline and heating oil with each priced at $4 to $4.50 a gallon, and including electricity, would put a severe strain on a family’s total budget, according to calculations in a study this month on offshore wind power for the University of Maine.

The median household income in Maine is roughly $45,000. If the projected prices of fuel hold true this year, a family could spend up to $10,000 on energy — more than 20 percent of its gross annual earnings.

Staff Writer Tux Turkel can be contacted at 791-6462 or at:

tturkel@pressherald.com

 

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