Record Heating Assistance Applications Foreshadow Residential Fuel Crisis

Posted by Zoe Macintosh on February 26, 2010 at 4:20 pm

Thermal image of a (heated) house on a cold night. A federal program's temporary termination would cause the number of homes without heat to grow considerably. (image: epogee.co.uk)

As reported Monday by the New York Times, applications for heating assistance in the United States have reached record levels for the third consecutive year. Soaring demand for federal heating assistance has forced states to scrape the bottom of the $5.1 billion federal heating assistance program known as LIHEAP (Low-Income Home Energy Assistance Program). That sum, allocated by Congress to be spread out among every state, has not budged from its 2008 levels despite the past year’s increase of over one million applicants. The pressure has led state officials to warn Congress that they may have to discontinue further heating grants if no more money is awarded to the program.

Utility companies, barred in many states from shutting down service during the winter, wait until the spring to sever connections to households with unpaid bills. Until receiving the backlog of payments, they will then wait indefinitely before again providing heat, even as winter returns. Despite the staggered sequence of this scenario, when coupled with the millions of jobless who will see their unemployment checks expire this April, it means that untold numbers will be faced with no gas and electricity during the spring and coming winter.

The World Socialist Web Site (WSWS), unsurprisingly, puts the matter in starker terms than the New York Times, calling the need for heating assistance a “social crisis mounting.” Though it strikes a disarming tone for readers unused to getting news from sites devoted to social revolution, that strong wording attaches a proper weight to the underreported impact of energy prices on struggling Americans.

Without heat, people die. Iowa LIHEAP director Jerry McKim stated: “This is more than an energy issue and needs to be acknowledged for what it is: a serious public health matter.”

He explained this evaluation by pointing to heat deprivation’s blow to other necessities.

In an effort to better afford their utility bills, many elderly households cut back on prescribed medicine and/or set their thermostats too low risking their already insecure health and families with young children sacrifice their children’s nutritional needs…Disconnected households use unsafe methods of heating that increase the risk of carbon monoxide poisoning, and those who live by candlelight increase the likelihood of a house fire tragedy.

The WSWS makes the point that even a temporary (one to two months, as reported by the Times article) cut-off in assistance would lead to thousands of people enduring this winter and the next without heat—as mentioned above, utility companies will not restart services until overdue bills have been paid.

The unusual breadth and duration of the present recession will likely push these conditions further into the mainstream. On the one hand, heating oil consumers are at a disadvantage because they rely on a fuel that is provided by private companies, not utilities. No law protects heating oil dealers from cutting off service due to unpaid bills, so people faced with revoked or denied heating oil assistance will not be buffered from harsher consequences.

On the other hand, heating oil consumers in dire straits are at an advantage because their heating fuel service has no connection to their financial standing with utilities. Therefore, heating oil users are not required to pay electricity and telephone bills in order to have heat. It is also worth pointing out that, because heating oil dealers are private companies, they benefit consumers because they compete with one another for the lowest price, unlike utilities which usually enjoy a monopoly.

The flip side of this issue is the difficulties experienced by heating oil dealers. After speaking to 150 heating oil dealers in ten different states, we at HeatingOil.com have learned that in these economic times it is not unusual for heating oil customers to default on their payments by thousands of dollars per month. The burden builds every month as new customers default and previous balances go unpaid. Contrary to the popular belief that the oil industry equals “Big Oil,” heating oil dealers are small businesses that deal with their problems in the same manner as would a local grocery if people stopped buying their goods. When they can’t pay for operating costs, they shut down. Representatives of HeatingOil.com have seen a trend of heating oil dealers raising their credit standards for customers by 8-10 percent during the recession.

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The Low Income Home Energy Assistance Program, or Liheap, was installed in 1982 out of the recognition that residential fuel needs comprise a social welfare issue on par with food and medicine. Its awards an average of $500 per season to its recipients, who are typically families below the federal poverty line, the disabled, and the elderly, but also include people at 150% the federal poverty line. Some states, such as Wisconsin, have committed supplemental funding to their program, permitting aid for applicants with incomes up to a percentage of the state’s median. According to the Times, heating aid applications were 7.7 million last year, 5.7 million in 2008, and are projected to be 8.8 million by the end of this year.