As the price of oil crept up and temperatures kept up last week, Joel Miller scratched his head and said he had no idea what to expect this winter.

Normally by mid-October his busy season has begun, but the general manager of Schwanger Bros. & Co. in Lancaster noted that with temperatures hovering in the high 70s, few people were worrying about the price of home heating oil this winter.

Maybe they should have been.

The price of oil topped $90 a barrel for the first time last week, and U.S. officials estimate that while home heating costs will go up across the board this winter, those who rely on fuel oil will be socked the hardest, with costs up an estimated 22 percent over last year.

But, noted Miller, last year was an anomaly. Last autumn, like now, dire reports of sky-high energy prices led many heating oil customers to lock in prices for the season. Then temperatures stayed relatively mild, prices fell, and the real winners were those who rolled the dice and "rode" the market, calling around for a price when the tank ran low.

This winter, all bets are off. Some local energy companies are getting more calls from consumers asking about both spot prices and contract prices. With prices so high, there might be more comparative shopping going on. Some firms have created price programs designed to offer protection when prices go down, as well as up.

And many local energy executives say they're convinced prices must fall. But even those who have been in the business for decades admit to being mystified at the market's gyrations.

"It has really gone a little bizarre," said Dale Skaggs, owner of Davis Energy Services, 1360 Manheim Pike.

More bizarre
And it is likely to go even more bizarre, perhaps as soon as Monday.

Oil futures hit $90.07 late last week before retreating. But analysts say they expect the surge in oil prices to continue in the coming week. That's led to an increase in prices at the pump: According to AAA, the average price of regular unleaded gasoline in Lancaster County was $2.77 per gallon, the highest in more than a month.

Nationwide, residential heating oil prices averaged $2.79 per gallon last Monday, according to the U.S. Energy Information Administration, the highest total on record.

Heating oil prices could hit $3 per gallon this winter, said Schwanger Bros.' Miller. But, he added, oil could also drop back to $60 per barrel.

"In the last 15 days our wholesale costs have just gone 'Boom!' " he said. "My gut feeling is that this cannot continue."

The U.S. Department of Energy has predicted that natural gas costs will be 10 percent higher this year than last, but for customers of UGI, prices might actually fall. The company, which serves about 55,000 customers here, raised rates by 3.9 percent in early June, and predicted it would again hike rates in early December by another 3 percent. That second hike now appears unlikely, said company spokeswoman Debra Leuffer. "There may actually be a rate decrease," she said, though she couldn't say how much.

34 percent use oil
Propane and electricity costs are up over last year, but heating oil, used by an estimated 60,000 homes, 34 percent of all households in Lancaster County, has seen the biggest, and most unpredictable spikes.

"When I started in this business 19 years ago, you'd maybe see prices swing by one to two cents over the course of the whole winter," said Mike DeBerdine III, chief executive officer of Rhoads Energy in Lancaster. Now, he said, prices move that much in a single morning.

That volatility led a record number of consumers to sign up for "price protection plans" in recent years. But last year brought a nasty surprise: When the price went down, and they were stuck paying higher prices, many called their oil companies to demand lower bills. In many cases the companies couldn't comply. They'd purchased oil futures contracts, locking in their own prices.

But the experience of last year doesn't seem to have prompted a rush of consumers looking to dump price protection plans, said DeBerdine: "Very few phones are ringing with people trying to get off the program," he said.

The volume of calls from consumers checking on prices and inquiring about pricing plans remains brisk, he said.

The higher cost of oil is likely to hit low-income customers the hardest. "There already are people calling for oil even though there's nothing we can do until November," said an official with the Community Action Program in Lancaster, which helps disburse emergency funds via the Low Income Home Energy Assistance Program, or LIHEAP. The organization can provide one-time "crisis" funds of up to $300, but right now that's only buying an estimated 115 gallons of oil,"and that's gone in two weeks," said the woman, who asked that her name not be used.

"It seems like there's a lot of people who are going to be shut off this year," she said.

But that will depend on the weather, unrest in the Middle East and the speculators whom experts say are helping to drive the price of oil up right now. As was the case last year, the price of oil might fall; the possibility prompted local energy firm Worley & Obetz to add "downside protection" to its price protection plan, "so if the price goes down as it did last year, our customers' prices will also go down," said Seth Obetz, chief executive officer.

"The unfortunate thing," he noted in an e-mail, "is in all energy sectors, we continue to be subject to the 'stair step effect' where new market highs inevitably turn lower, but rarely lower than the last high, so we are tricked into thinking that we are happy with anything under $3 per gallon."

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Gil Smart is associate editor of the Sunday News. E-mail him at gsmart@lnpnews.com, or phone 291-8817.