Slide 6 of 27

Low crude oil prices and high stocks are expected to keep heating oil prices lower this winter than last in spite of higher expected demand. The base case shows prices averaging 88 cents per gallon over the heating season, compared to 92 cents per gallon in winter 1997/98.

• Last year’s prices were also moderated by crude oil prices that fell fairly steadily over the winter period. In addition, warm weather last winter kept demand down.

If weather is 10 percent colder than normal this winter, prices will likely peak at levels about 5 cents above last year’s peak and average about the same (or a little higher) at 93 cents per gallon -- 5 cents per gallon more than in the base case. On the other hand, with 10 percent warmer weather, prices could average 5 cents per gallon lower than the base case.