The rise in heating oil prices will cause very serious problems for Maine citizens next winter. The general Maine economy will be significantly depressed as disposable income that would have supported general commerce within the state economy will be diverted into heating oil costs. Most of that money will not remain in the state’s economy. Many households will suffer depression-like challenges.
As of June 11, 2008, heating oil costs in Maine are as follows:
| High | Low | Average | |
| Portland | $4.729 | $4.240 | $4.415 |
| Augusta/Waterville | $4.749 | $4.359 | $4.519 |
| Auburn/Lewiston | $4.559 | $4.299 | $4.429 |
| Southern Maine | $4.699 | $4.240 | $4.459 |
| Midcoast Maine | $4.690 | $4.249 | $4.567 |
| Mid-Maine/Bangor West | $4.799 | $4.469 | $4.616 |
| Downeast | $4.799 | $4.429 | $4.634 |
| Northern Maine | $4.699 | $4.499 | $4.692 |
| Averages | $4.724 | $4.348 | $4.541 |
The average cost now of $4.54 represents spending of approximately $1.8 billion per year by households*1. The national average for heating oil one year ago was $2.496 *2. In one year the aggregate cost to Maine’s households has increased by more than $800 million.
The increase in heating costs to the average home in the past year for a single winter’s heat has been more than $1,850 bringing the annual heating bill for the averagehome to almost $4,150.
The relative impact of this increase on households will be somewhat proportional to annual income. Some upper income brackets will be marginally affected. But many more lower income brackets will be hit very hard. The following charts show the income distribution in Maine and the proportion of gross income that heating costs will take by income bracket.
The bottom chart shows that 8% of Maine’s households will need to spend more than 50% of their gross income just on heating oil next winter. The chart also showsthat 57% of Maine’s households will have to spend 10% or "more of their pre‐tax income just on heating oil next winter.
The social and humanitarian consequences of this scenario are potentially very dire.
This dramatic loss of purchasing power will also ripple across the entire economy. For every dollar taken out of the economy, economic activity will decline by at least two dollars. Thus the increase in heating oil cost over this past year is expected to depress the Maine economy by at least $1.6 billion. The Maine state product in 2007 was $39.9 billion *3. That amounts to a potential 4.0% shrinkage in the size of the economy.
*1 80% of Maine’s 550,000 households use heating oil. The average annual use is about 900 gallons.
*2 http://tonto.eia.doe.gov/dnav/pet/hist/whoreus4w.htm
*3 http://www.bea.gov/newsreleases/regional/gdp_state/gsp_newsrelease.htm