Hold on to your pocketbook! Within only 10 days of President Ronald Reagan's order totally deregulating the price of oil, prices have jumped. And so have tempers.
Consumers, stung by rising home heating prices and the fierce winds and bitingly cold temperatures of winter, have looked President Reagan's decontrol order in the face and have come away shivering.
Telegrams have been sent to the President, and protest meetings have been scheduled. Richard Kessel, head of the Long Island Consumer Action, for example , has sent a telegram to Reagan asking him to declare New York a disaster area.
Mr. Kessel says he sent the wire "because I think when other areas of the country are severely devastated by a hurricane or a tornado, the government is very quick to step in. And I don't think the President knows that 80 percent of the homes on Long Island and New York are heated by oil. For the middle class it wil be devastating."
Mobil Corporation raised gasoline and heating oil prices a nickel a gallon this week. In part, Mobil is trying to recover increased crude oil costs "resulting from decontrol," a spokesman says.
Exxon, the No. 1 marketer of gasoline and home heating oil, hiked wholesale gasoline prices nationwide 5 cents a gallon Feb. 4 after having hiked them 2 to 3 cents a gallon last week. It's the "effect of domestic crude decontrol," says an Exxon spokesman. But, he adds, the continuing increase in the cost of raw materials was also a key factor.
Texaco Gulf, Standard Oil (Indiana), Shell, Atlantic Richfield, and several other major oil companies also have made at least one move to increases prices since the decontrol order.
"Residential users of oil just haven't budgeted for this [price increase] like commercial and industrial customers," says Diane Harris, the fuel and power editor of Energy User News. She notes that prices for home heating oil and gasoline have risen about 5 cents a gallon nationally since Reagan's decontrol order. And she predicts, prices will rise another 5 cents a gallon later. However, she adds: "You can't blame all the price hikes on decontrol. The price increases in January were the result of OPEC price increases in December."
Fred Deming, the chief economist for Chemical Bank here, says the current round of price hikes has come sooner than he expected. But he sticks to his prediction that the consumer price index will pick up only one-half percent from decontrol (and 12 to 12.5 percent for the whole year).
"I know there is going to be some grumbling from the consumer," Mr. Deming says. "And with this cold winter we've seen a larger increase in oil. People are going to feel strained. But, in my estimation, nothing should be done but to emphasize conservation. One of my colleagues said he was substituting sweaters for oil."
Deming says he is expecting the world price of oil to reach $40 per barrel by the end of the year. OPEC probably will again raise prices this spring and summer in spite of weak markets. However, Warren Shimmerlik, senior economist at the brokerage firm of Merrill Lynch, Pierce, Fenner & Smith, thinks the US consumer will not be as adversely effected by these hikes.
"If OPEC raises prices another 10 percent this year," he says, "it would impact the gross national product deflator by only about 1 percent."
There is some talk that Reagan might also try to decontrol the price of natural gas by this fall. However, William Brown, director of energy economics at Chase Econometrics, points out this would require congressional approval.
"I think Congress is still scarred from its battle over the Natural Gas Policy Act and would back away from this," he says. If Congress were to undertake natural gas deregulation, he estimates, the price of natural gas would rise from an average of $1.55 per thousand cubic feet to $4 to $6.