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Fuel Oil News and the Industry at 80

Note: Offered below is an update to the industry history provided for FON’s 75th Anniversary, with an interview with the son of FON founder Curtis Klinger and a special section on former FON Editor George Schultz.

It’s difficult to imagine how revolutionary oil heat was when it came on the scene. Wood had provided heating from the campfire in humanity’s earliest days, to the household fireplace modern dwellings came into use. It facilitated cooking with the fireplace spit, then both heat and cooking with the cast iron, wood-burning stove. Then coal came on the scene in the late 1800s.

Coal became a competitive, then dominant fuel in the United States for a variety of reasons. For starters, wood was becoming scarcer in many industrialized countries, particularly in non-rural areas. Coal also provided superior energy content and handling compared to wood. The steam-powered transportation sector of the day–marine and rail–quickly adopted coal and helped bring the residential heating market along.

While coal was easier to handle, it was more difficult to acquire and had to be mined though various techniques. However, coal itself provided the solution to this challenge when processed onto Coke, which fueled the blast furnaces that moved society away from the Agricultural Age to the Industrial Age. Industrial Age technology itself allowed for the efficient mining and transportation of coal from to national and international markets.

This disruptive shift in society resulted in a range of new problems, covered (with some amount of artistic license) by such author/activists as Upton Sinclair, but it led to some dramatic quality of life benefits as well. Cheap, cast iron bed frames moved people off the floor when it was time to go to sleep. Mechanical equipment began to replace hand power for a range of household tasks such as clothes washing. This was only enhanced when combined with electricity and electric motors.

As part of that advancement, Dave Lennox is credited with revolutionizing home heating in 1885 with the industry’s first riveted-steel coal furnace. About the same time boiler-fed radiant heating using steam or hot water allowed for more effective heating than relying on natural hot air convection.

For all of the advantages these appliances brought, and in combination with the advantages of coal as an easier to manipulate fuel source, there were still problems. As with wood, coal required the homeowner to keep the fires burning and handle the resulting ash. Soot was also a common issue in the home, and even in the pre-environmental era coal-based pollution was having a notable quality-of-life impact on urban and industrial areas.

As with coal, the transportation sector led the way in the transition to a superior fuel. Although coal would soldier on in rail transport for decades to come, at the start of the 1900s maritime transportation (driven by the navies of the world) quickly saw the advantages of using fuel oil as a substitute for coal. As a fuel, oil had far fewer maintenance requirements. For starters, there was no stoking required to keep an optimal fire burning. Oil was easier to store onboard ship and easier to transfer at sea allowing for enhanced high seas refueling. Oil was also safer. Smoldering coal bunker fires were all too common, as was the explosion of coal dust. Oil also provided more energy per pound.

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Curtis and Mary Klinger

These same advantages found their appeal in the household, though as with the shift to coal it would take some time for home heating oil to become widespread. The First World War would set the stage for the transition, and even the Ford Model T would play a role.

The internal combustion engine was finally starting to see applications beyond the novelty stage with the Ford Model T of 1910–the first practical and affordable automobile. World War I would be the first heavily mechanized war. Wartime oil production and refining and post-war automobile sales continued the expansion of a thriving oil industry.

The 1920s saw the rise of the household oil burner, facilitated by innovative controls from Honeywell. At the same time, more automated coal systems were introduced to lower some of the maintenance issues, but too few problems were solved to offset the advantages of oil heating. Oil heating began to find its way into new construction as well as in retrofits of existing coal boilers.

 

Fuel Oil News came about in response to this growing market. It was launched in 1935 by Curtis C. Klinger. The concept of Fuel Oil News actually goes back further, since it was originally a supplement (dubbed Oil Burner News) to another magazine called The Oil Marketer. Klinger sold advertising for the magazines published by Oil-dom Publishing Co. in Bayonne, N.J., the company headed by his father, Oliver.

After his father passed away, Curtis’ brother, Oliver, Jr., took over as head of the company, but Curtis continued as publisher of Fuel Oil News. Eventually, Oil-dom Publishing was dissolved, but Fuel Oil News continued under Curtis’ leadership as a separate entity. In the 1970’s, Curtis, Jr. joined his father and helped run it until it was sold to Hunter Publishing in 1983. Curtis, Sr. retired at that time from the active management of Fuel Oil News, but continued to represent the magazine at conventions and trade shows for several years.

Jack Klinger, Curtis’ son, spoke with FON about how FON came into being.

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John “Jack” Klinger and his son Grant.

 

“When fuel oil news started my father was actually going to Columbia University,” said Klinger. “My grandfather had started a magazine that carried pipeline news and my father said why don’t we start a magazine for the fuel oil market? It seemed like a good idea. They had offices in Texas and Chicago and Bayonne, N.J. And that summer my father went out and started selling space in the magazine and it got going.

He also recalled his experiences growing up around the magazine in the 1960s. “I can remember going in the office when I was nine or 10 years old and stuffing envelopes and I remember the old linotype machines. My cousin Warren had the ability to read backwards, which always impressed me. That was how you proofread most effectively to pick up punctuation or grammatical errors. It was always fun going in.”

Jack’s wife Brenda recalls Curtis’ wife Mary who passed away last year. “She just loved to talk about all the folks they met the trade show and how they loved working with the advertisers, and we still visit with many of them (Jack and Brenda today operate Pennywise fuel—see pg.__)” said Brenda. “We have particularly fond memories of the Amthors who helped us out when we were starting up our oil company.

Jack has some convention memories as well. “I can remember my father going to conventions and bringing home all of these little trinkets and toys and we loved that,” he said. “And then we started going to those conventions in the 1970s ourselves, and we brought that same stuff back for our kids and they loved it.”

In 1993, the magazine became part of Premiere Publishing Co., headed by Bill Straub, who had served as its publisher when it was part of Hunter Publishing Co. The magazine was subsequently acquired by Adams Business Media and is today owned by EPG Media, LLC.

Over the years, the magazine’s staff and contributors included some of the most important pioneers in the oil heating industry. Charlie Burkhardt, retired president of the New England Fuel Institute, was an early contributor who wrote many articles for Fuel Oil News. George Young, a former NEFI official, was a member of the Fuel Oil News staff, as was James Matthews, a founder of the National Association of Oil Heating Service Managers. Long time editor Tom Byrley was a former vice president of a leading boiler manufacturer and general manager of the heating department at Sherwood Brothers in Maryland. John Sibarium, long-time chairman of the National Old Timers Association of the Energy Industry, was a regular contributor to Fuel Oil News for many years.

When FON was founded in 1935, the overall oil and fuel industries in the United States were still shaking out. Fuel oil and kerosene had begun to replace coal as a primary energy source. As the 1940s dawned, the United States was still the leader in oil production with the U.S. producing 65% of the world’s oil in 1940. That was to change with the discovery of the “super-giant” oil fields in Kuwait and Saudi Arabia. Oil heating would continue its ascension into the 1960 when it would begin facing some stiff competition of its own.

 

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Octopus style heating furnace in use in the 1930s.

As with World War I, the Second World War saw a dramatic increase in production, refining and distribution. This expansion in refined product production piggy-backed with the tremendous residential and automotive boom of the 1950s and 1960s. While oil heating was ramping up, new competitors were coming on the scene as well. Although they would have a tremendous impact on the market, fuel oil would not go completely the way of coal.

Welding and metallurgy advances made during the war made pipelines more practical. The 1950s and 1960s saw an explosion in number of pipelines that would benefit oil distribution, but also the distribution of natural gas. The access to electricity also moved forward making electric coil heating an option anywhere there was power service. Propane has also come on the scene as an alternative.

Gas and electric brought with them several advantages over oil in the maintenance department. There was no need for a regular delivery and less appliance maintenance. But there were disadvantages as well. Both, and particularly electric heating, were typically more expensive. Gas also presented added safety issues. And gas was limited to where the pipelines ran, and even with the post-war expansion there was hardly universal coverage. Even so, today slightly more than half of the homes in the United States use natural gas as their main heating fuel.

Propane is more of a direct competitor in areas not served by gas, and broadens fuel use to cooking appliances. Many of today’s oil marketers have taken on propane as an additional fuel offering. While there are many similarities between the two fuels, there are notable different as well such as the capital costs involved to get up and running, particularly with the customer tanks.

By comparison, approximately 6.2 million U.S. homes rely on heating oil to keep the house warm in the winter. Oil is still a dominant heating fuel in the Northeast and mid-Atlantic. This is an impressive figure given the extreme fuel prices and price volatility the industry faced between 2004 and 2014.

Heating oil had not only been price competitive with natural gas throughout most of its history, but it offered a superior price point to the consumer. Starting in 2004 heating oil prices began an ever-increasing march upward.

In the run-up to the great recession of 2008, EIA heating season data shows that retail heating fuel prices reached $3.85 in mid-March of 2008. The collapse brought prices down to $2.16 at the same point in 2009. But then prices began moving ever upward again reaching $4.24 in early February 2014. Then prices dropped and are currently in the $2.25 range with a great deal of expectation that such low prices are going to be around at least for a few more years.

Several things can likely be linked to both the upward movement in oil prices and the eventual decline. First, the industry, led by the New England fuel Institute and  the Petroleum Marketers Association of America began taking a long hard look at the commodity deregulation that it occurred at the end of the Clinton administration. They, along with a range of traditional commercial hedgers, saw no rational market driven reason for such significant price increases. A range of noncommercial players had rapidly increase the volume of trades in the futures market and dark markets, such as the Intercontinental Exchange headquartered in Europe, offered almost little transparency. The physical oil markets are tied to the futures markets though common pricing mecahnisms.

The association’s work diligently to get market reforms in place, with significant additional effort being provided by Sean Cota, who at the time was an oil marketer as the co-owner and president of Cota & Cota, Inc. The market collapse in 2008 finally provided an opportunity to get some of these reforms passed in the Dodd–Frank Wall Street Reform and Consumer Protection Act. While Wall Street has worked aggressively to water down these regulations in the rule-making process, there has been an exodus of the major commercial banking players from the field.

Likely more influential, though difficult to quantify relative to the market reforms, has been the success of the shale fracking process in developing new domestic oil reserves in addition to natural gas. The technology has become more efficient, almost by the month, particularly under the pressure provided by Saudi Arabia’s attempt to drop prices and drive these new oil producers out of the market. There is some question today as to just how low the profitable price point is on a barrel of oil from the  fracking process, but some estimates currently see profitability at $40-$50 per barrel.

The good news for the industry is that while fracking-generated low natural gas prices are likely here to stay, the same can likely now be said for low oil prices as well. As may still be cheaper (at least in the short-term), but even so they are sufficiently close that the pressure for conversion has certainly been reduced significantly. The major uncertainties with both oil and natural gas prices likely involve the extent to which develop.

It’s an overused cliché that will be overuse here one more time because it does have a core of truth: That which does not kill us make us stronger—Friedrich Nietzsche. With that in mind the oil industry has become very strong indeed. The pressures since the 1950s, and most particularly the last few years, have been exceptional. And some operations have died, or in most case been absorbed by larger players.

For those companies that have fought through the challenges, operations are efficient. Companies are, by and large, no longer strictly focused on driving an oil truck, but on HVAC service, propane sales in the myriad of profitable ancillary profit opportunities. Companies are exploring profit opportunities in areas from bulk wood pellets to security services the bulk diesel and motor fuel sales.

This flexibility should not be surprising. As noted earlier in the article, the path to fuel oil involved moving from wood to coal, and then from coal to oil. A great many of today’s heating oil companies once sold coal before that switch occurred or even ice in the days before electrical refrigeration. The industry has long been flexible, adaptable and effective at providing its customers with a tremendous degree of service for whatever in-home need they might have relative to warmth and comfort. And that is why me bet is that this industry will be around 80 years from now, selling whatever heating fuels that cannot be provided by a utility to their loyal customers.

 

In Remembrance—George Schultz

At a time like this it’s good to remember Fuel Oil News’ long-running editor George E. Schultz, who helmed the magazine from 1982 to 2002. He died suddenly of a heart attack on Oct. 17, 2002, at age 61. During his 20 years of editorial leadership with the magazine he provided a face to the industry that was colorful in character, but backed up by quality journalism.

He grew up and attended public schools in Philadelphia before moving to New York state and graduating in 1959 from Monroe-Woodberry Central High School in Central Valley, N.Y. After serving in the United States Navy, stationed in Las Vegas, he attended the Newark Campus of Rutgers University. He graduated Phi Beta Kappa with a BA in Journalism in 1973.

After working as a police reporter for the Newark Star Ledger and various industry trade publications he came to Fuel Oil News in 1982.

George had the following to say about FON in one of his editors columns from a previous anniversary:

“Sometimes if you’re too close to a situation you can’t see the problems clearly. They can only be seen by some a ‘step removed’ who has a better perspective and is more objective.

“Although Fuel Oil News is an integral part of the oilheating industry, we are outside the day-to-day business activities involved in operating a marketing organization so we can look at the industry from many different angles. Because we are in constant communications with all levels ‘ marketers, suppliers, association executives, government officials and consumers ‘ we are able to assess all the facts and provide our readers with some ideas that perhaps they may not have thought of themselves.

“We hope we can continue to serve the industry in this manner for many years to come. Nobody has all the answers, but by constantly examining our actions, we can learn from our mistakes. We’re never too old, or too young, to learn.”

At the time of George’s passing, the industry was asked for various remembrances. Fuel oil news columnist Charles Bursey offered the below:

Many of you have read my articles that I have been writing almost monthly for many years. I first met George at a NAOHSM convention at a place that was formerly know as the old Playboy Club that later became the Concord. We discussed my doing an article for Fuel Oil News relative to the oil industry. In 1995, with George’s support, I was off with pen in hand and have continued this article-writing relationship to the present.

George always had a strange smile, but was sincere, for sure. He also was a great defender of the oil industry, always accompanied with a little humor. I will always remember George asking, “What are the three biggest lies?” and they are as follows: 1. The check is in the mail. 2. I gave at the office, and 3. We’re from the government and here to help you. I could also get a fishing story and hear about his boat that recently had the motor rebuilt.

I would imagine that George is still running around with a camera around his neck looking for a story.

So long George,

Charlie Bursey

 

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