Experts say rising fuel prices could hurt economy

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(Host) Some Vermont households are paying almost $4 per gallon for the fuel oil to heat their houses.

And as VPR’s Ross Sneyd reports, experts warn that the spiraling costs could drag down the economy.

(Sneyd) In a spot-check of fuel oil prices around the state, VPR found that the price per gallon has risen to three-dollars-and-96 cents at some dealers in Rutland and Middlebury.

In Chester, Brattleboro and Bennington, it was $3.85.

Steve Wark of the Public Service Department says the state just completed a survey of 70 dealers across Vermont. It found prices as low as $3.09 per gallon and as high as $3.98.

(Wark) “We do typically see ranges like that. I think it’s very much aggravated by the fact that prices are very high to begin with. But it is a very competitive market. So dealers are going to try to in essence get the best that they can for their product.”

(Sneyd) With the exception of natural gas and electricity, the home heating fuel industry is not regulated.

So all the state can do is monitor the ups and downs of the price, which is driven by $100 per barrel crude oil and speculation on financial markets.

Wark says the seasonal demand helps to drive the price fluctuation. But he says it also makes it harder for Vermonters, who are trying to heat their homes.

(Wark) “It’s really difficult because we’re right in the middle of winter right now. And this hurts Vermonters. This is not good for people on fixed incomes. But we’re going to get through it and what we need to do is start planning for the next year.”

(Sneyd) In the meantime, the regional economy has to absorb the price shocks.

Economists say energy costs – which include gasoline as well as home heating – account for between four and six percent of a family’s budget.

Still, that’s a little less than what it cost the typical family in the late ‘70s and early ‘80s, the last time there was an energy price spike.

Economist Art Woolf says the economy didn’t fare so well 30 years ago.

(Woolf) “In a sense we’ve been through this before. But that’s kind of saying the good news. The bad news is that when we went through this before in the early 1980s and late 1970s it wasn’t good for the economy. We had a recession back then, which was induced in part by those high energy prices.”

(Sneyd) Woolf is quick to point out that he’s not predicting a recession based on $4 per gallon heating oil.

But he says the pressure on family budgets also isn’t going to be good for the rest of the economy.

For VPR News, I’m Ross Sneyd.

AP Photo/Toby Talbot

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