THE PRICE IS RIGHT

Wow, who would ever believe in 2016 that we would see oil and propane prices drop to the prices that we are experiencing? The last time I checked oil was at $26 per barrel; which I’m told was last seen about nine years ago. And with oil… on Jan. 20, 2016, I paid $1.67 per gallon and a year ago I paid $3.68 per gallon. What does this really mean to those in the business?

I have spoken to a couple of oil dealers in my area and the answer I’m getting is that most of their customers are happier than they were 12 months ago, although one dealer said one of his customers called for a price and questioned why the price wasn’t lower; even though they were paying a dollar plus more per gallon a year ago. As the saying goes, you can’t please everybody.

Another dealer said that they were sending letters to their budget customers advising them to stop making their monthly payment. The reason is that the budget plan payments will exceed the amount required and the company will end up paying back the customer unless they say (as in Las Vegas) let it ride!

I also remember about a year ago, the mechanical companies, and several oil dealers who diversified into the propane business, were telling me that they were inundated with calls from oil customers who wanted to convert from oil to either propane or natural gas. Although the price of natural gas was lower, many consumers had to endure the high cost of adding a pipeline, which from what I’m told could have exceeded $1,000 and there was a long waiting period for the installation. A propane conversion was often less expensive due to the portability of the equipment, and some propane suppliers offered a special incentive for the conversion.

However, with these low oil prices, gas conversions are seldom mentioned and oil customers are able to keep their families warmer by raising the thermostat to a more comfortable range than was the case a year ago.

Rebates have often been offered as an inducement to customers to get them to convert to natural gas. I’m told that the incentive is somewhere in the $1,000-$1,500 range. It’s unfortunate that oil dealers don’t have something similar as an upgrade opportunity to install heating equipment that has a higher level of efficiency and provides for cleaner air. Yes, many will say that today’s oil equipment is cleaner and as much as 20% more efficient; which is true, thanks to the equipment manufacturers and Brookhaven Laboratory for their continued efforts in this area. But is it enough?

Something I’m often asked by several companies and end users is: How long do I think the oil and propane prices will stay at this level? I use fuel oil and hope it will be low for a long time, but as I have said many times my crystal ball broke a long time ago.

In closing my message is: Keep those fuel oil and propane tanks full and remind your customers that more often than not the lower prices come with COD requirements and no service.