Fallout from Russia’s invasion of Ukraine has pushed retail motor fuel and heating oil prices toward record levels in Maine at a pace that would have seemed unimaginable only weeks ago.

The steep run-up has state policymakers considering a gas tax holiday, Mainers who heat with oil looking to minimize purchases until warm weather comes, and car dealers eager to sell more fuel-efficient and electric vehicles – if they can get them from manufacturers.

Average regular gasoline prices in Maine have risen by roughly 51 cents per gallon in the past week, averaging $4.11 on Monday, according to GasBuddy’s survey of 1,228 stations in Maine.

That’s a nearly 65 cent-per-gallon rise from a month ago. It’s the highest price since the Great Recession in 2008, and on track to break that record in the days ahead.

Heating fuel prices already have soared to record levels.

Cash prices for heating oil in Greater Portland broke the $5-a-gallon mark at some dealers over the weekend, according to the latest data from MaineOil.com. It’s a startling increase. Average prices in the area stood at $3.91 one week ago, according to the Governor’s Energy Office.

“We’ve never been in this situation before, with this level of uncertainty,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “As we lose a major global producer under the weight of deserving bipartisan sanctions for invading a sovereign country, the cost is high.”

Forget about the $4 per-gallon-mark for gasoline, De Haan said. He’s expecting new all-time highs to be set soon, pushing the national average closer to $4.50.

DEALERS SCRAMBLE TO KEEP UP

The state’s gasoline and heating fuel dealers are hearing from customers, said Charlie Summers, president and chief executive of the Maine Energy Marketers Association.

“Whether it’s fuel oil or gas, people are agitated, they’re concerned, and rightfully so,” he said.

Dealers have been handling the surge in calls from people who want to order heating oil before prices shoot even higher, said Kai Nice, general manager of Nice Fuel Co. in Portland.

“Customers who were monitoring the news last week were quick to order as much oil as they could afford after the Russian invasion of Ukraine news broke,” Nice said.

That has led to an unprecedented challenge for the industry, he said, because wholesale prices are moving so high, so fast.

“No oil company offers same-day delivery,” Nice said, “so we are selling to customers at a certain price on a Monday that is a guaranteed rate, but we don’t deliver to them until a couple days later, and our price we pay from the oil terminal could have gone up substantially during the two-day window.”

The risk, he said, is by the time his delivery people get the oil from the terminal to the customer, the customer’s price could be less than what the company actually paid for it that day.

“It is something we have never seen in our industry and it has been very difficult to manage,” he said.

Nice doesn’t expect prices to fall before the end of the heating season. For those who are going need more than one additional tankful before warm weather hits, he said, it may make sense to fill up now.

MAINERS ‘SHOCKED’ BY PRICES

The rapid rise of worldwide petroleum prices is hitting home in Maine, at the oil tank and the gas pump.

The oil truck pulled in front of Rick Hazelton Jr.’s home in Portland on Friday. The cash price per gallon was $4.59.

When Hazelton came home from work that night, the bill was waiting for him.

“I saw it on the counter,” he said. “I was definitely shocked. Truly shocked.”

The price was $3.49 when Hazelton last got a delivery, about a month ago. The skyrocketing price hurts, he said.

“You can’t save any money to do anything extra,” he said. “It takes everything to pay for groceries, heat the house and gas.”

Hazelton supports the United States cutting energy purchases from Russia after it brutally invaded Ukraine, but he hopes the high prices it caused don’t last.

“We have other places to get oil other than Russia,” he said. “Our reserves should be released, or pull more oil from Alaska or the Middle East.”

Gas had hit $4.26 per gallon on Monday at the Circle K at 327 Main St. in South Portland, triggering a range of opinions and emotions among customers.

Patrick Matheson of South Portland said he drives about 3,000 miles each month, but that paying more to fill his pickup truck is a small price to pay.

“I don’t mind paying $4.50 a gallon if it means we can put more pressure on Russia to stop bombing civilians in Ukraine,” Matheson said.

Cathie Strniste of Scarborough isn’t happy with the high prices. She might cut back on dining out, and instead use that money for essentials such as gas.

But compared to what’s going on in Europe, Strniste said, it’s more than manageable.

MANY SUPPORT OIL BOYCOTT

That sentiment isn’t unusual, according to a Reuters/Ipsos poll released Friday. The survey found that 80 percent of Americans – both Democrats and Republicans – support a ban on buying Russian oil, which accounts for less than 10 percent of U.S. oil imports.

The Biden administration has been considering that option but is moving cautiously amid concerns about further gas price spikes and the impact on inflation. A bipartisan group of lawmakers in Congress, however, was working Monday on a measure to ban Russian energy imports.

Brianna Whitehouse of South Portland said the high gas prices are making it almost impossible to go anywhere except necessary destinations.

Whitehouse said she has a 15-year-old daughter who just started driving. She needs 70 hours of driving practice, and at $4.26 per gallon or more, that adds up fast.

Kyle Christensen of South Portland said the prices at the pump are “tough to swallow.”

His truck, which he needs for work, only gets around 15 miles per gallon. It’s new, so he said he won’t be switching to a more fuel-efficient vehicle anytime soon. He’ll drive his wife’s smaller car whenever they’re going anywhere farther than down the road.

Ron Chadbourne, of South Portland, said the only thing the sanctions on Russia are going to do is put working people like him out of business.

He blames President Biden for the record-high gas prices. The second that Russia bombed Ukraine, he said, the president should have opened up the Keystone pipeline and started fracking. Biden canceled a critical permit last year for the Keystone XL Pipeline, meant to import Canadian tar sands oil to the U.S. The project was then abandoned.

Chadbourne drives a pickup truck for work but said in the summer, when it’s safer, he’ll ride his motorcycle to save fuel.

“We’ll be paying $8 a gallon by August if it keeps going like this,” he said.

TAX HOLIDAY PROPOSED

The price drivers pay for gasoline is built on a foundation of federal and state taxes, money used to repair and build roads and bridges. The federal gas tax is 18.4 cents a gallon; Maine’s state tax is 30 cents a gallon.

Policymakers in Washington have been considering a so-called gas tax holiday, suspending the levy to give consumers some relief this year. But the idea, championed last month by some Democrats, has come under fire for the damage it would do to the trust fund for highway improvements – just as the Biden administration is rolling out its long-awaited infrastructure plans.

In Maine, Republicans this week are proposing a pause in the state gas tax.

Rep. Laurel Libby, R-Auburn, has submitted an emergency, after-deadline bill that would suspend the Maine tax on gasoline for the remainder of 2022.

“Maine people are struggling to pay for their basic necessities in the face of crippling inflation, and in a rural state like ours, gasoline is absolutely a necessity,” Libby said in a statement. “We need to provide relief for Maine families now, rather than waiting for the federal government to do so.”

For example: At $4.11 a gallon, it costs $61.65 to fill a car that takes 15 gallons. Eliminating the 30-cent state gas tax would cut the total cost by $4.50.

The state highway fund receives roughly $230 million per year from the state fuel tax. It’s the primary funding source for Maine Department of Transportation operations, to pave and plow roads and fill potholes, as well as other road and bridge work.

Revenues from the gas tax also fund state agencies. The Maine Department of Transportation receives 77 percent, the Secretary of State’s office receives 13 percent and the Department of Public Safety gets 10 percent.

“Eliminating this revenue for the last nine months of the year would remove an estimated $173 million from the highway fund, which would translate to approximate losses of $133 million for MaineDOT, $23 million for the Secretary of State’s office, and $17 million for the Department of Public Safety,” said Paul Merrill, MaineDOT’s communications director.

Communities across Maine would receive $11 million less in local road assistance funds, Merrill added.

“For a Maine driver who drives about 15,000 miles per year and gets about 25 miles per gallon,” he said, “a nine-month holiday would save that driver roughly $135 per year.”

Through her media office, Gov. Janet Mills was asked if she would support a pause in the gas tax. The governor said she’s open to considering “fiscally responsible” ways for state government to help, but she stopped short of commenting on the gas tax proposal. Mills pointed instead to her $750-per-person relief check plan that would send Mainers below a certain income threshold money to use as they see fit.

HARD TO SWITCH CARS

Past gasoline price spikes have triggered greater interest in fuel-efficient cars and trucks. It’s not clear if that’s happening now, however, because of the general low inventory of vehicles available due to lingering global supply chain problems related to the coronavirus pandemic.

“We haven’t seen the impact in the showroom yet,” said Adam Lee, chairman of Lee Auto Malls, which has 16 dealerships in Maine. “The supply is so limited, it really masks what the demand is.”

Used car prices are so high that even vehicles with poor gas mileage haven’t fallen in value, Lee noted. Demand for full-size pickup trucks – a top-selling vehicle in Maine – remains strong. But that could change, Lee said, if gasoline approaches $5 a gallon.

Hybrid vehicles, which get better gas mileage by combining a battery and electric motor with a gasoline engine, also are selling well. For example, a popular SUV, the Honda CR-V, comes in both non-hybrid and hybrid versions. The non-hybrid is rated for combined highway/city driving at 29 miles per gallon. The hybrid is rated at 38 mpg combined, but costs more.

Electric vehicle sales also should benefit from high gas prices, but again, inventories remain tight. Most electric vehicles right now are being ordered and pre-sold, Lee said.

“We call the customer when they come in and they pick them up,” he said. “No one has a bunch sitting on their lot.”

Staff Writers Hannah LaClaire and Bonnie Washuk contributed to this report.

Copy the Story Link

« Previous

Stocks plunge as oil prices surge

Next »

Kohl’s to open 100 small-format stores, expand Sephora shops