The 2012 Sourcebook
Each year Fuel Oil News provides its readers with its SourceBook Survey. The goal is to offer a snapshot of our readership (relative to the specific respondents that year) that provides a comparison benchmark. We received over 100 responses this year from a range of companies that scale from smaller dealers to some of the largest larger regional operations. While some long term trends can be observed, some major changes were recently made in the survey structure and the mix of respondents change year to year. So, each survey should be taken on its own merits. We provide up front the demographics of the specific respondent group.
As part of the initial process we comb through the data to eliminate failed survey responses. Within the accepted data, some respondents might be smaller dealer operations, and others larger marketer/wholesaler operations that are far from typical and that might only operate home heating oil delivery and service as a division of a much larger and more diversified operation. This survey is confidential and we cannot (nor would we) specifically identify the companies that provided a response, but a thoughtful look at the outliers would suggest the above assumptions are accurate. However, both the typical smaller fuel oil dealer and large regional diversified petroleum and fuel-oil specific marketers are part of the industry’s competitive landscape. For our readers’ personal comparisons, when practical this year, we worked to provide two sets of data: one based on the overall average for the group, and another with the outliers removed (generally companies that well exceeded twice the full-group average).
Regional Demographics
From a regional perspective, and as is typically the case, the vast majority of respondents were from New England or the Mid-Atlantic states.
Geographical Region
Percent
NEW ENGLAND: Maine, New Hampshire, Vermont, Connecticut, Massachusetts, Rhode Island
42%
MID-ATLANTIC: New York, New Jersey, Pennsylvania, Maryland, West Virginia, Delaware, Washington, D.C.
36%
SOUTH: Kentucky, Virginia, Tennessee, North Carolina, South Carolina, Louisiana, Mississippi, Alabama, Georgia, Florida
6%
MIDWEST: Ohio, Indiana, Illinois, Michigan, Minnesota, Iowa, Missouri, Arkansas, North Dakota, South Dakota, Nebraska, Kansas, Wisconsin
11%
WEST: Oklahoma, Texas, Montana, Wyoming, Colorado, New Mexico, Idaho, Utah, Arizona, Nevada, Washington, Oregon, California, Alaska, Hawaii
5%
Revenue
From a revenue standpoint, the overwhelming numbers of respondents (40%) enjoy revenues between $1 million and $5 million. Some 20% had revenues $5 to $10 million.
Revenue
Response Percent
Less than $1 million
10%
$1 to $5 million
40%
$5 to $10 million
20%
$10 to $25 million
12%
$25 to $50 million
10%
more than $50 million
8%
Number of Employees
The average operation for the full group featured about 46 employees. This was definitely driven by several companies that had many times the average in total number of employees, but not extraordinary figures for delivery drivers and service technicians. The second figure (included in parentheses) indicates the total when the outliers (companies at least twice as large as the gross average) are removed, if different.
.
Number of employees, including yourself
Number of service technicians
Number of delivery drivers
46 (13)
5 (4)
5
Number of Customers
Since not all companies supply commercial or propane customers, the second figure included in parentheses moves away from the gross average to just include the average for the companies that serve those specific customers. All respondents supplied retail customers.
Number of home-heating customers
Number of commercial/industrial customers
Number of propane customers
2904
239.91 (262)
1015 (2690)
As noted, some of the respondents were far larger than what would be considered a typical fuel oil dealer. The adjusted table provides an industry perspective closer to the typical dealer with the largest operations (at least twice as large as the gross average) removed. The second figure included in parentheses moves away from the gross average to just include the average for the companies that serve those specific customers.
(adjusted)
Number of home-heating customers
Number of commercial/industrial customers
Number of propane customers
2269
176 (195)
500 (1602)
Sources of Revenue
All of the accepted respondents provided retail fuel oil. Some 37% provided bulk fuel oil and 32% provided propane service and 71% HVAC sales and service. Additional, but not listed, sources included bulk diesel sales, bulk motor oil and lubricants.
Revenue Sources
Retail fuel oil
88%
Bulk fuel oil
37%
Retail gasoline
32%
Bulk gasoline
22%
LGP/LNG, retail or bulk
32%
Heating equipment sales
71%
Air-conditioning equipment sales
42%
Fuel Oil Sales by Volume
When looking at the percentage of fuel oil sales by volume, it is similarly not surprising that roughly 78% of that volume goes to residential customers.
Percentage Breakdown of
Annual Fuel-Oil Sales, by Volume
Residential
78%
Commercial
19%
Industrial
3%
Biofuel and Ultra Low Sulfur
There has been a strong movement in the industry towards biofuel-based heating oil and ultra low sulfur diesel. This has been driven for a range of reasons’these green fuels tend to appeal to residents in the primary heating markets; they can significantly simplify heating appliance maintenance; and they represent an opportunity to be an acceptable fuel in any low carbon fuel standard that might be set in key heating oil markets. Nearly a third of respondents (29%) sold a biofuel blend. Of those selling a blend, 89% of the respondents sold B5 (5% mixture), and 33% sold B20 (25% mixture). Other blends sold, but not quantified in the survey, included B2 (2% mixture) and B10 (10% mixture). In addition to biofuel, 62% sold a heating fuel with ultra low sulfur content.
Petroleum Futures, Price Protection and Online Ordering
There is an even split at 50% with this year’s respondents between the companies that participate in the futures market and those that don’t. Slightly fewer at 46% offer price protection programs. Of those that offer price protection 31% of their customers take advantage of the opportunity. Some 39% of respondents charge a fee for the program and 28% a buyout option. Slightly less than one third of respondents (41%) offer their customers online ordering.
Fuel Margin
The average fuel margin was fairly consistent among respondents; however, several fuel oil marketers had goals almost twice as high as the average. The number in parentheses reflects removing these companies from the totals. That was not the case with the propane respondents, which were far more consistent and significantly increased from last year’s respondents.
What is your goal margin on fuel oil?
Retail
$0.79 ($0.76)
Commercial
$0.54 ($0.50)
Propane
$1.32
Bulk Plant Operations
Some 51% of respondents operated a bulk plant with an average storage capacity of 137,441 gallons. As with other areas, several large players provide storage capacity considerably beyond the average figure. When the largest players are removed, the average storage capacity comes out to 82,443 gallons. Some 70% of respondents stored other petroleum products in their bulk plants and 80% had substantially upgraded their bulk plants in the past 10 years.
Fuel Additives
All of the respondents used fuel oil additives. The additives were blended in a variety of manners that often overlapped:
Where Blended
Bulkplant tanks
80%
On trucks
45%
Directly into customer tanks
35%
The Service Department
Roughly 82% of respondents operated a serviced department.
Service Department
Service calls
1,867
Service inventory
$136,750
Service vans
6
As noted, some of the respondents were far larger than what would be considered a typical fuel oil dealer. The adjusted table provides an industry perspective closer to the typical dealer with the largest operations (at least twice as large as the gross average) removed.
(Adjusted)
Service calls
852
Service inventory
$60,773
Service Vans
4
The figures for service vans track well with the number of service technicians noted earlier in the survey. Some 31% of respondents indicated they were considering the purchase of new service vehicles in the coming year.
Delivery Trucks
For delivery trucks, the optimal desired storage capacity among respondents averaged out at 3,218 gallons. For Class 8 trucks, the second figure included (in parentheses) moves away from the gross average to just include the companies that actually operate Class 8 trucks.
Trucks Owned and Leased
Owned and leased
7
How many are Class 7?
6
How many are Class 8?
0.5 (2)
As noted, some of the respondents were far larger than what would be considered a typical fuel oil dealer. The adjusted table provides an industry perspective closer to the typical dealer with the largest operations (at least twice as large as the gross average) removed.
(Adjusted)
Trucks Owned and Leased
Owned and leased
5
How many are Class 7?
4
How many are Class 8?
2
Some 21% of respondents indicated that they would likely be buying a new truck in the coming year and 22% indicated that they would be buying a new tank amount on existing chassis. The number of trailers reported tracks the reported number of Class 8 tractors.
New environmental regulations require that diesel engines offer enhanced emissions technology. This involves either selective catalytic reduction (SCR) or exhaust gas recirculation (EGR). SCR technology provides a notable boost in fuel efficiency and power compared to EGR, but requires the use of diesel exhaust fluid (DEF) that is stored in a separate tank. SCR technology is seen as being the dominant technology between the two alternatives. Some 66% of respondents have to address DEF requirements. Respondents were asked to identify how they were going to meet the DEF requirements for their fleets of vehicles.
DEF Solutions
Jugs
27%
55 gallon drums
30%
IBC totes
9%
Don’t understand the question
9%
Unfortunately, 9% of respondents are apparently unaware of the new requirement.
Customer Tanks
Respondents reported that 87% of their home heating customers had 275 gallon tanks, 11% had 550 gallon tanks and 2% had a tank of a different size.
Delivery Technology
Where delivery technology is concerned, cellular phones still play a critical role in the delivery process. However, two-way radio equipment, GPS tracking and dispatch support software each have a solid user base among respondents.
For Deliveries, Do You Use:
Two-way radio equipment
38%
Cellular phones
94%
Pagers
18%
GPS tracking
32%
Dispatch support software
15%
HVAC Equipment and Service
Roughly 76% of respondents install and/or service heating and cooling equipment. As would be expected, oil related appliances were heavily sold, installed and serviced. However, 31% were involved with solar heating, 6% with wood pellet systems, 81% with air-conditioning, 9% with electric resistance and 63% with gas burners.
Do you sell, install or service any of the following equipment? (Select all that apply)
Oil burners
96%
Furnaces (gas/oil/electric)
93%
Domestic hot-water systems
96%
Warm-air systems
89%
Radiant heating systems
61%
Gas burners
64%
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