— As governments weigh their potential involvement in Syria
and investors calculate how instability in the Middle East will affect the oil supply, the fallout of that uncertainty is being felt by homeowners in Western Massachusetts who are trying to secure oil for the heating season.
The Obama administration is still pondering its options in the wake of reports that the Syrian government attacked thousands of its people with chemical weapons. Popular sentiment over Syrian President Bashar al-Assad has divided the country, sparking uprisings that have been put down by violence.
Although Syria is not a major oil producer, the turmoil in that country has created more instability in the already unstable Middle East. The resulting uncertainty has caused oil prices to spike in recent days. Unless those prices go down, the cost will inevitably be passed along to those who heat their homes with oil.
“All the price fluctuation is because of Syria,” said Stephen Chase, president of Fuel Services, Inc., a South Hadley
heating oil company. “Yesterday, the price climbed through the roof because of talk of a (U.S.) attack.”
Michael Sobon, who owns O’Connell Oil Associates, Inc., which serves customers in Hampshire County and some Hampden County communities, said heating oil prices have gone up 13 cents a gallon in the last two days because of the unrest in Syria.
“It’s a no-win situation,” Sobon said of U.S. involvement in Syria. “Today (the price) is holding, but the market’s teetering.”
Depending on whether or not customers have already signed contracts for fuel this heating season, or how their supplier operates, there could be little if any impact on their wallets, however.
“What’s going on in the Middle East has not affected our customers,” said Laura Benoit, who runs Bay State Fuels in West Springfield. “We’re locked in.”
Benoit said her company fixes a price with its supplier when it buys heating oil. Bay State bought its oil for the coming season in July, before oil prices began to destabilize.
“We contract for oil the same as our customers,” she said.
Ed Taft, the owner of Auth Fuels in East Longmeadow
, said the system varies from dealer to dealer. About half of his customers lock in a price when they contract for oil before the season.
“Those customers are well protected,” Taft said. “Those who didn’t (lock in) will have to ride out the market and see where it goes.”
Unlike Bay State Fuels, O’Connell Oil Associates buys its oil according to the demand for its oil.
“I don’t overbuy,” Sobon said. “We stay with what I sell and buy. Hindsight is great, but I wish I’d bought a ton of it in June.”
Some suppliers insure themselves against spikes in oil prices. Chase said Fuel Services, Inc. tells its supplier how many gallons it wants to protect. In addition to letting customers lock in a price, the company offers contracts in which the price might vary but is capped.
“Some people have price caps protected by an insurance policy,” he said.
Local oil company owners are cautiously optimistic that the market will settle down, absent some major development in Syria.
“If this gets resolved, prices are going to come down,” said Sobon.