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Heating oil sales not so hot

Worcester, MA, February 28, 2012 The owner of Whitney Brothers Oil Corp. in Clinton says it's virtually impossible things will “average out” for home heating oil dealers during this winter, which has been unusually warm.

“You can make up for a bad November,” Barry J. Whitney said. “You can make up for a relatively warm December. If it's warm after that, you're done. You're cooked.”

Heating oil sales are down about 30 percent compared to this time last year, said Michael Ferrante, president of the Massachusetts Oilheat Council.

At Worcester Regional Airport, the average temperature in December was 36.1 degrees, 6.7 degrees above the average of 29.4. In January, the average temperature was 29.2 degrees, 5.1 degrees above the average of 24.1, according to the National Oceanic and Atmospheric Administration.

About 950,000 homes in the state are heated with oil, or 36 percent of the state's 2.7 million households, according to census figures.

Mr. Ferrante said oil heat consumption has decreased significantly the last five to seven years, primarily because of the efficiency of new systems and conservation.

The number of dealers is also down, as there were about 1,100 dealers about 15 years ago, compared to 740 now, he said. The drop is due to larger operations buying mom-and-pop businesses, and companies closing their doors, he said.

Mr. Whitney said during a good year he sells 1.7 million gallons of oil, but this year he's on pace to sell 15 percent to 20 percent less.

“Hopefully, if you've been fortunate enough to save during the good times, it helps you weather, no pun intended, through the bad times,” Mr. Whitney said.

Good, strong companies with a good customer base can survive by performing installation work and diversification, Mr. Whitney said.

According to Mr. Ferrante, members of the Massachusetts Oilheat Council generally have good financing and strong banking relationships that allow them to continue in business.

Many oil heat dealers forecast what customers will use and commit to those gallons with their suppliers, Mr. Ferrante said.

The council is particularly concerned about smaller companies, he said.

The council helps oil delivery companies get loans from the federal Small Business Administration.

“We're seeing prices of petroleum products go higher. That could certainly include heating oil, and if that's the case, some of these smaller dealers may need additional financing to get them through the winter months to supply their customers,” Mr. Ferrante said.

Robert Nelson, director of SBA programs in Massachusetts, said the agency has a modified program that can help oil heat dealers get bank loans of up to $5 million. It functions as a revolving line of credit that is typically secured with the working assets of the business, meaning its inventory and accounts.

The SBA also modified its contract line of credit that could help dealers get loans if they hold oil contracts to supply municipalities or school systems with oil.

Robert A. LaFlamme, owner of Crowley Fuel Co. in North Brookfield, said his part-time drivers have not been getting as many hours this winter.

“But we've picked up quite a bit of new business. We're certainly not, by any stretch, at the same level we were, say, last winter. But it could be worse. We'll survive. We've seen this before. I can remember a winter it was about 20 percent off. This is much worse than that, for sure.”

Jeff Tasse, owner of Tasse Fuel Corp. in Southbridge, said he has three oil trucks, and in the winter he normally has two fulltime drivers and a part-time driver.

“I've had trouble keeping just two guys busy,” he said.

It hasn't just been the warm weather, Mr. Tasse said, citing the unusual October snowstorm and last summer's tornado that ripped through parts of Western and Central Massachusetts, including Brimfield, Sturbridge, Southbridge and to a lesser extent Charlton.

“We had the tornado that put a lot of wood on the ground, and the October snowstorm that broke a lot of trees. And National Grid has been cutting trees from wires and leaving the wood on the side of the road, and people are picking it up. It means the people who hadn't been using wood (for woodstoves) in a while are because they haven't had to buy extra,” Mr. Tasse said.

While the Southbridge plumbing and heating business also hasn't had to fix frozen pipes or perform other services it normally does during the winter, Mr. Tasse said he isn't going anywhere.

“We've been around a long time,” he said, adding the company expects to be able to get onto customers' roofs earlier than normal to provide quotes for solar energy projects.

Mr. LaFlamme of Crowley Fuel agrees that the winter has provided an opportunity to stay busy with projects that need catching up on. Soon, Mr. LaFlamme said, he plans to roll out a furnace that will burn 100 percent bio-fuel made from soy. It would be used as a warming station for outdoor events.

The mild winter has also been ideal for in-home installation of oil heating systems, Mr. LaFlamme said.

“Normally in the winter, we try to avoid that because temperatures put the pressure on,” he said. “You have to get the job done in ‘x' amount of hours.”

Mr. Ferrante acknowledged the upside to the weather is it has saved customers money.

“That's a good thing for anyone, actually, but for those who are struggling to pay their heating bills, this is a season where there's been some relief.”


National Oilheat Research Alliance ECC is funded in part through the National Oilheat Research Alliance.