Some state lawmakers are calling for federal action in response to a petroleum price surge that approximately doubled many Long Islanders' home heating bills in recent weeks, leaving them frustrated and wondering why.

The Senate Consumer Protection Committee held the third of a series of hearings on the matter last Thursday, Feb. 10 at Oyster Bay Town Hall South in Massapequa, as part of an ongoing search for reasons behind the crisis. Through it, they gained new evidence of the need for a federal investigation into whether the skyrocketing bills were the result of the price gouging, according to Chairman Charles J. Fuschillo (R, 8th Senate District).

Although prices have begun to go down as demand eases due to milder temperatures, they rose sharply during this January's cold snap, and peaked at between $2.40 and $2.50 a gallon on Feb. 6, up from $1.24 on Jan. 17, and 91 cents this time last year. Senator Fuschillo and his colleagues on the Consumer Protection Committee are among those who want Attorney General Janet Reno to investigate the mysterious hike as a criminal matter.

"This situation has really become intolerable for residents of Long Island," Fuschillo said at Thursday's hearing, noting that he and fellow elected officials have received hundreds of calls from concerned homeowners. "We have been asked the basic question, 'Why has my bill gone up so much, why did it go up so fast, what can I do about that, and how am I going to be able to afford to heat my home?'"

Fuschillo said the hearing produced a key piece of testimony from Keyspan Senior Vice President David Manning which helped confirm suspicions that the price spike was the result of market manipulation by the oil industry. "Someone from his office has received a phone call, was privy to a conversation from one of the bargers stating that 'We're going to tie up tonight, and we're not going to come into the Sound 'til tomorrow, because if we stay here, the prices will go up,'" Fuschillo said. "So, it obviously has the bad taste of the pure definition of manipulation of the market, and we're going to pass that on to the appropriate authorities."

In addition to calling for a national investigation of the oil industry, the Senate Consumer Protection Committee has joined Governor Pataki in asking President Clinton to release some of the Strategic Petroleum Reserve to relieve prices. The reserve, which contains over 560 million barrels of oil in storage caverns in several gulf states, was created in response to the 1973 Arab oil embargo. The US. may use resources from the reserve at a rate of about two million barrels per day to buffer oil prices. The President has so far denied the request to draw down the oil to relieve the current heating oil prices, although the measure has received support from such federal lawmakers as Congressman Peter King and Congresswoman Carolyn McCarthy. Clinton did however, release $11 million in emergency Low Income Energy Assistance Program funds to New York to help homeowners pay their heating bills during the crisis.

While the price spike has confused residents and public officials alike, representatives of the oil industry maintain that the dramatic increase in prices is no mystery, but rather can be explained by the simple law of supply and demand. Low supply coupled with high demand, they noted, was the overwhelming cause.

"The events of the past three weeks were extraordinary," Kevin Rooney, executive vice president of the Oil Heat Institute of Long Island, Inc., a trade group which represents local oil providers, said, testifying at Thursday's hearing.

He cited such causes as OPEC production cutbacks, and difficulties in replenishing local supplies due to extreme harbor wind conditions. He added that the oil industry gained several large institutional customers, when these were forced to switch to oil from natural gas, because gas companies did not have the supplies to accommodate them during the cold snap. He did, however, also express suspicion that the traders who influence oil prices had profited from the spike. "Somebody made a lot of money," he said.

Neal Wolkoff, executive vice president of the New York Mercantile Exchange (NYMEX), refuted that claim in his testimony. Discarding the notion of price manipulation by traders, he said this could not have been done unless they had been physically holding up supplies. "Calling it a product of market manipulation is not the answer, and is far from the truth," he said, attributing the crisis to such factors as a 13 percent drop in production by OPEC from January 1998 levels, lower stock levels, outages at several refineries over the past few months, and severe winter weather.

However, Richard Kessel, chairman and chief executive officer of the Long Island Power Authority (LIPA), which has reported a 48 percent increase in electricity generation costs due to the oil price hike, called the crisis a scam. He noted that he saw similar hikes occur repeatedly as chairman of the New York State Consumer Protection Board under the Cuomo administration, and that they are avoidable.

"There is always some market fluctuation with petroleum products, just as there is with any commodity," Kessel stated in his testimony before the Senate Consumer Protection Committee. "This time around, however, it seems that the petroleum refiners purposely underestimated the demand for this winter and fell short on their stocks. As a result, prices increased dramatically." He also promised not to raise electric rates as a result of the crisis.

Senator Carl Marcellino (R, 5th Senate District), a member of the Senate Consumer Protection Committee, said the issue needs to be resolved once and for all, in order to stop it from recurring. "We need to do some planning," he said. "It seems it happens every year."

Meanwhile, Fuschillo noted that the Senate Consumer Protection Committee will continue to work with the Senate Energy Committee, Attorney General's Office, Governor and State Consumer Protection Board to determine what state action may be necessary. The Assembly is also working on the matter, and has also held committee hearings to investigate the mysterious heating oil price hike.