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Bad Bets on Home Heating


Consumers find themselves trapped in wildly overpriced oil contracts.

Note to home heating oil customers: Don't dabble in the futures markets.

Last summer, as the price of a barrel of oil soared to a record $147.27 a barrel, some homeowners decided to sign home heating oil contracts at an astronomical price before the cost went even higher.

They guessed wrong: Oil recently fetched $56.80 a barrel on the New York Mercantile Exchange, a decline of 61.4% from last summer's high. Some home-heating oil customers signed contracts to pay $4.75 a gallon for a commodity that now sells for $1.84, a decline of 61.2%.

A deal is a deal, you say? Ha! Some homeowners now yelp that they need a government bailout - much like AIG (AIG) and the banking industry.

And why not? The homeowners can plausibly say they've made an honest mistake.

The Connecticut Petroleum Association and 8 other energy groups have asked US Treasury Secretary Henry Paulson to redirect some of the $700 bailout allocated to ease the credit crunch help get some of their customers out of what are now wildly overpriced contracts for home heating oil.

The homeowners can say with a perfectly straight face that they're not asking for anything more than what some propose for General Motors (GM), Ford (F) or Chrysler.

But why stop there? Home construction has been pounded in the downturn, leaving tens of thousands of skilled workers without a paycheck. The travel and gaming industries have also taken a hit.

Where's the bailout for workers in those sectors?

The irony, of course, is that cash-strapped home heating oil customers are seeking help from one of the worst-run, over-leveraged, screwball operations in the history of the world: the Federal government. How many trillions of dollars is Uncle Sam in the hole, counting current and future liabilities?

Luckily, the Federal government has the technology to handle the problem – the printing press. Yup, crank 'em up and print more money.

Let's just hope someone in Washington remembered to pay the electric bill - because those homeowners in Connecticut may yet have to rely on the BTU content of a freshly printed stack of $100 bills.
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