Many of you are probably still suffering from the pain of last season’s oil prices, past due accounts and possibly repaying your bank for the money, which was so graciously loaned in the form of an extension to your line of credit.
Because I get to see and talk to many oil dealers in the course of my day, I somehow end up hearing about their concerns pertaining to the future of the oil business. It seems that many are already experiencing both anxiety and fear of the unknown when it comes to the 2011 heating season oil prices. I recently made contact with my own oil company to see what they are going to offer me for a lock-in price and the answer that I got from an employee was,” A decision hadn’t been reached yet.” Is this not August already?
It seems those oil dealers who have a crystal ball are seeing a repeat of last heating season’s price of $4.00+ per gallon. However, one full service company representative told me that they were offering budget customers a lock-in of $3.96 based on a signed contract. Now that’s a deal! (Send me an e-mail as to the price in your market area).
One dealer told me that he received an 8:30 AM notice that his price was going up by 7 cents and he basically had until 9:30 AM to pick up a load at his supplier’s rack in order to be ahead of the increase (at least this one time). Now I wondered how this dealer, whose truck had already left for deliveries, could empty his load and drive 30 minutes to the city terminal to get a load before the increase went into effect. There was a time when the dealer would get a notice around mid-day that the oil price was going up at midnight, which certainly was enough time to be ahead of the increase.
Many of you have also mentioned how during the summer months the major suppliers would offer a SUMMER DISCOUNT that could be passed on to the end user as a summer fill discount. Not so today.
I was also told there are presently four oil dealers in upper New England now on the market for sale, and it doesn’t take a genius to come up with at least five reasons why. However, I would suggest low price per gallon margins as one.
I’m still often asked what a company can do to diversify their business because of the fact that oil is said to be shrinking due to the level of competition coming from the gas industry. The answer to me is not all that complicated. In my younger days, I often heard the statement made ‘if you can’t beat them, join them.”
I have observed for myself many of the one time oil only dealers getting equipment prices for both the natural and LP side and investing in the propane market. This is an example of becoming a diversified company that is looking to stay in business. Of course, there are many other methods of diversification, which I have mentioned in previous articles.
I had an opportunity to read a letter from a company that presented itself as a national social network that brings consumers together to buy oil. They say that they want pay a margin over rack and the member can earn a fair profit. My first question was who determines the fair profit or is it based on the size of the participant’s overhead?