Higher energy costs act like a tax, siphoning money that consumers might spend on other goods and services.
“Heat, utilities, and food are right at the top of the list, so push comes to shove, you give up the discretionary stuff,’’ said Christopher DeMers, 56, of Bolton. “However, I am comfortable that I can keep my current lifestyle and comfort level unless oil prices rise significantly.’’
Where heating oil prices might go remains unclear. Any number of factors could affect the price, including the progress of the economic recovery, global demand for oil, the strength of the dollar, and severity of the winter.
The key factor, of course, is the price of crude oil, which accounts for about 60 percent of the cost of heating oil. Crude has been particularly volatile over past few months, soaring above $100 a barrel, diving to $80, and climbing again. It closed above $86 in New York yesterday.
“Anyone who says they know what oil going [to do] is a liar,’’ said Jeff Bursaw, owner of Bursaw Gas & Oil in Acton. “It could easily go down 50 or up 50 cents. Your guess is as good as mine.’’
Phil Flynn, energy analyst PFGBest in Chicago, said he expects prices to remain high through the winter, rising at least in the early part of the season. Those prices, however, could moderate if crude supplies increase with the end of the Libyan civil war.
“There is a strong possibility oil production comes back online from Libya soon,’’ Flynn said, “ and I think we’ll see supplies build up.’’
But Chris Lafakis, an economist specializing in energy at Moody’s Analytics in West Chester, Pa., said customers should not plan on a drop. Moody’s is projecting crude oil prices will move higher, to about $96 a barrel, by the end of the year.
Lafakis said the loss of Libyan oil had a minimal impact in global markets because other producers made up the shortfall. As a result, a revival of production in Libya is unlikely to have a dramatic effect on overall crude supplies.
“We think [oil] prices will remain close to current prices,’’ said Lafakis.
