BUSINESS

Heating oil market feels the chill as demand drops 85 pct

By Chryssa Liaggou

There were more than 33,000 applications for heating oil subsidies from the Finance Ministry in the first week of the program’s launch, but demand in the market remains exceptionally low compared with last year.

Even though the retail price has ranged between 1.27 and 1.40 euros per liter against expectations for 1.40-1.55 euros/l, thanks to the drop in crude oil prices internationally, demand in November has declined by about 85 percent from the same month of 2011, heating oil traders estimate, after a 90 percent annual decline in October.

This slump in demand has forced about 30 percent of traders to abstain from the process this year or simply stop operating altogether.

A great number of consumers in major cities have decided not to buy any heating oil this winter, while many others had stocked up last April, before the increased special consumption tax came into force. The few who are buying heating oil are in most cases limiting their purchases to 200-300 liters, which means they are charged at a higher rate than when acquiring 1,000 liters or more.

Traders cannot expect the situation to improve, as, besides the combination of the recession and the high retail rates, it depends on the weather. Industry professionals believe that even when temperatures start to drop further after a particularly mild fall, total demand by the end of the season will come in at 55-60 percent lower than last year.

Natural gas users are also reluctant to switch on the central heating, as even though it is 35 percent cheaper than heating oil, it remains prohibitively expensive for many consumers. In contrast, the use of air-conditioning systems to heat homes is gaining ground, along with fireplaces and wood and pellet stoves.

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