As the heating season winds down, we find oil topping $115 per barrel. The impact on the price of refined product is obvious, and filling a customer’s tank can be a shocking experience. You can argue the higher costs for energy from other fuels, but the sticker shock from these prices really get the customer’s attention as opposed to the gradual monthly bleed from natural gas, for example. And, oil prices have jumped to the point that natural gas is now a cheaper solution. The key word is now, given the market nature of oil prices that can easily reverse and will likely reverse if past history is any indication, less so, with gas.
However, until such a time comes to pass the industry has to position itself to survive the immediate shocks associated with filling a tank and prevent the potential conversion to natural gas where apllicable.
Regular contributor George Lanthier provided a departure from his usual focus on the nuts and bolts issues relative to oil heating technology to provide some perspective on similar times that have arisen in the past. We have previously faced both long periods of cheap oil and a variety of oil shocks. In fact, only recently have current oil prices surpassed pervious prices when adjusted for inflation. And as with previous shocks, the cost of filling the tank has caused some customers to question home heating oil as their solution of choice.
Lanthier discusses the retrofit and conservation as roadblocks to conversion. Selling the retrofit carries some concerns, but his experience suggests that the benefits for the industry outweigh the potential downsides.
The industry has faced challenges over the years ‘ no doubt. And this period is as challenging as any in the past. But, home heating oil has its advantages, even in areas where there is direct competition from natural gas and especially with the most savvy marketers and dealers. The industry has survived many years, but to keep from going the way of coal it has to continue to push ahead with technology, service and efficiency.
We also cover the 50th anniversary of industry manufacturer Crystal Metals, the planned direction of the new president over at Sprague Energy, a look at a new burner developed at Carlin Combustion partially using NORA funding and a roundup of the HVAC tools on the market.
So let’s go into the off season with a focus on how to best position your operations for whatever challenges we face next fall. Will oil prices be in the same stratosphere they reside in today? Perhaps, or perhaps not. Either way, the fall is only a few months away.