Hello,

The link below is another article on oil I found from MSNBC.com.   The section on ultra low sulfer diesel is interesting, because few have spoken on the impacts of it.  (I remember that cutoff date… what a mess that was)

http://www.msnbc.msn.com/id/27929740/

Take Care….

Here is a link to one of the better reports I think the AP has done on Heating Oil…

http://www.msnbc.msn.com/id/27956966/

 

Hello,

 

Here is a link to a good “all around generic” article as to what has been happening with the crude prices…  Let me know what you think…

http://www.time.com/time/business/article/0,8599,1853775-1,00.html

 

Since I seem to be on a Pre-Buy contract roll lately….  Notice the legal lingo….  This is a popular article that I have seen sprout up on a few dealers websites today….   They must be going thru what we are…

 

Homeowners with Pre-Paid Oil Contracts Locked In at Higher Price

By  DAVE GRAM Associated Press Writer MONTPELIER, Vt. (AP) _ Burned last year after she failed to lock in a contract for heating oil, Corinne Wilkins, a home health aide, signed a contract this year before winter set in.As it turns out, there are many people like Wilkins, and entire communities as well, that unknowingly agreed to heating contracts as prices peaked at historic highs. Now she, and mostly Northeastern towns such as Springfield, Vt., are stuck. State attorneys general are advising consumers to honor their contracts. They’re legally binding documents, said Melissa Karpinsky, press secretary to Massachusetts Attorney General Martha Coakley. “Consumers should absolutely read all contracts closely before committing,” and compare those offered by various dealers, Karpinsky said. She noted some dealers allow consumers to break an agreement for a fee, typically about $200. Maine Assistant Attorney General Linda Conti said the consumer protection office has received a “significant” number of calls from people who’ve locked into oil contracts when the price was high and now wonder if they can get out of those agreements. “They’ve locked into a contract,” Conti said. If they breach it, the oil company could sue. There’s nothing the state can do if an oil customer has decided to lock into a price and signed a contract, and the price drops, she said. Prices for heating oil have fallen by 25 percent or more amid a massive economic slowdown that has depressed energy prices. Wilkins, of Contoocook, N.H., will pay $5 per gallon for oil this winter. “I thought it would go to $6 or $7,” she said. As of Monday, the average retail price of oil in New Hampshire was about $3.34, the state said. “I’m not going to try to get out of it,” she said. “I signed a contract and I always honor the deals I make. That’s just life.” The town of Springfield ordered the oil it would need to heat schools and other public buildings when the price was a little more than $4 per gallon for a bulk buy of 250,000 gallons, said Robert Forguites, the town manager. That price has dropped by more than $1 a gallon since then, he said. Now, Forguites can only dream about what could have been done with the $250,000 difference. Oil prices hit an all-time high of more than $147 per barrel on July 11 and industry analysts were predicting crude could hit $200. Heating oil dealers typically send notices to their customers in May and June, opening a period when customers can try to hedge against price increases the following winter. Dealers typically offer two methods: _ A “pre-buy,” allowing customers effectively to buy oil futures, agreeing to take a certain number of gallons at a set price during the next heating season. _ A “price cap” or budget plan, in which the customer pays in monthly installments but is guaranteed a maximum price. Those plans often include an offer of “downside insurance,” meaning if the price on the spot market drops, the consumer can ride the decline. But that protection typically costs a premium of 20 to 50 cents per gallon. Wilkins said she declined to buy it. “It’s over $100. I could buy half a tank of oil just for the insurance,” she said. While Wilkins said she wouldn’t try to get out of her oil purchase contract, it’s far from certain she could even if she wanted to. Dealers typically cover their pre-buys and fixed-price contracts by signing similar deals with their wholesalers _ some states require it. They can’t get out of those deals when prices drop, said Sean Cota, president of Cota & Cota, a Bellows Falls-based heating fuels dealer that operates in both Vermont and New Hampshire. Cota said a dealer could sue a customer for breach of contract, and could sue any other dealer selling to that consumer for a lower price for “tortious interference” _ helping the consumer violate the contract. “If it’s a matter of life and death for these businesses, they will” file suit, Cota said. Bob Garside, president of the Oil Heat Council of New Hampshire, said consumers who lock in prices for heating oil do well most years. “They don’t tell you about the three years that they won, they only tell you about the year that they lose, and that’s this year.” Cota agreed that such contracts had been a good deal in the past, but with heightened volatility in oil markets, he would be shy about entering into one now. “If I were a consumer, for the next several years, I don’t see the benefit,” Cota said. That volatility gives some hope to consumers and town managers like Robert Forguites, that their decision may not look as bad in a couple months. “I don’t think these low fuel prices are going to stay down, once it’s winter and there’s more demand,” Forguites said. If that happens, “We may not be as bad off as we think we are right now.”   (Copyright 2008 by The Associated Press. All Rights Reserved.)

Hello,

I am now going to do something that I never thought I would do on my blog… I am going to post a publication from the state government! (well most of it)  The name of the document is Oil Heat Contracts which is a publication of the Massachusetts Department of Energy Resources… Overall, I think this is an excellent document! Hence I post it, but I will comment on portions of it though. Except where I do specifically comment, someone from the State of Massachusetts is responsible for the rest of the text in this blog….

Oil Heat Contracts

A Publication of the

Massachusetts

Department of Energy

Resources

Commonwealth of

Massachusetts

 

 

Many oil heat dealers offer contracts to their customers. For consumers,

contracts may offer some price protection or the ability to spread payments

over the year. For dealers, contracts help them better predict customer

demand and may give them more buying clout for their customers.

Customers may assess the dependability of a dealer and the potential value

of a contract by asking any number of questions.

Customers should shop early and keep up with the trends in oil prices

through news reports. This year dealers offered contracts throughout the

summer although some dealers suggest between Labor Day and the end of

October is when most customers decide. Choices become limited as we

approach and enter the winter. (Chris Chase: If anyone read my earlier blog post entitled “This Title used to be a bunch of Crazy Stuff” you will read the (very short) history on our pre-buy this year. Article is correct that choices become limited anywhere once October rolls around, as that is the start of the (traditional) heating season.)

Questions to Ask about Dealer

What kind of experience, capability and equipment does the dealer have?

This will give you some idea of the skill level of the dealer. How many trucks

does the dealer have? Are they in good condition? Both are related to how the

company will be able to service your account.

Has the dealer already purchased the gallons they are committing to under

the contract? How will they guarantee that the oil will be available?

Some contracts will include language that says, “while supplies last.” The

contract should tell you what happens if the dealer is unable to provide you with

oil because of oil supply shortage. You may ask how they serviced their

customers in the Winter of 1999. (Chris Chase:  This is important!  I have been a huge advocate of having (wishing more like it) the State of Massachusetts follow the State of Connecticut in MANDATING that Oil Heat dealers do this! (or hedge in some other proper way) It is the only way to truly protect the consumer!  There have been too many horror stories over the last 2 years of companies not properly hedging themselves against price increases and going under,taking all of their customer’s pre-buy money with them!  Other states require dealers to protect themselves; why doesn’t Massachusetts?  (Some people go as far as wanting heating oil dealers to have restrictions placed on their bank accounts and other avenues such as that.. I am not an advocate of that, as there is just something wrong about having government involved in any businesses bank account)  But dealers should be required to protect their customers to the best of their ability… and there are several resources to do that….  I just know there are a few dealers out there, right here in Massachusetts, that took $4+ dollars a gallon from their customers for pre-pay, and didn’t buy fixed contracts from their suppliers (or use another proper hedging medium)… and they are making out like bandits now! (because prices have fallen so much) What would they do if prices continued to rise? Let’s pretend oil went up to $5 a gallon wholesale. (which it was close to doing)… What were those dealers going to do then…  Why reward unethical (or clueless) oil heat dealers for gambling with customer money?

Has the dealer offered contracts in the past?

Make sure your dealer has experience offering contracts. You may also ask how

their prices were last winter. Did they honor their fixed price contracts or have to

increase the rate?

Will the dealer give you references from other customers?

It is in the best interest of dealers to give you names and numbers of satisfied

customers that are willing to speak with you. You can also speak with friends and

neighbors who have experience with different companies. Local business groups

may also be able to refer you to reputable dealers in your area.

Does the dealer have a customer service department? Do they offer roundthe-

clock service?

Ask the dealer if they have a customer service number and the hours of

operation. Ask what happens if you have an emergency during off-hours.

Is the dealer licensed?

Oil heat dealers are not required to be licensed in Massachusetts. (Chris Chase: again.. the State of Massachusetts sometimes amazes me!  Let anyone get a truck and deliver… However, in saying this… our business has changed so much since 9/11, that the federal government monitors us to the extent where I guess that isn’t too much of an issue (due to hazmat fuels)

 

A consumer tip sheet

 

Questions to Ask about Contracts

What price plans are available to consumers?

Some oil dealers offer customers fixed price or variable

price programs.

A fixed price program establishes a fixed price per gallon

for a predetermined number of gallons. You should ask

how long the fixed price would be in place. You may also

ask if it is guaranteed.

In variable price programs, the price may change in

relation to how much oil the customer uses. They may

also vary according to when you sign your contract and

whether you pay some or all of your costs up front.

What is a cap price program?

A cap price program is a variable price program that offers

a guaranteed ceiling price per gallon of oil for a defined

period of time (i.e. Oct- Apr).  (Chris Chase: This is where we are really trying to go, and I hope we get enough interest from our customers next year to offer a program such as this.. Although I know I would have an easier time trying to fly to the moon, than convince some of our customers to switch from a traditional pre-buy program.) 

Are there any fees for setting up a cap price program?

Cap price contracts are generally more complicated to

manage than fixed-price contracts. Consequently, there is

sometimes a set-up fee associated with cap price programs

(about $30).  (Chris Chase: This is an example of the State not updating their information in several years, even though the last document date was July of this year.  The state is smoking some funny stuff if they think the program fees on this are only $30… It used to be! when oil was $1.50 or so a gallon.. Dealer costs on these programs were approaching .50 cents a gallon this year (depending on what the Nymex prices were at the time)  Depending on how each dealer structured their programs this year(namely how high the cap was & when they offered it).. I would say the average cost to the consumer was somewhere between $150-$300!  Now this may seem like a lot of money to join a program… but I would like you to think about this… Several people purchased prepay this year at $4.50 a gallon or so.. Say that person only bought 500 gallons, that was $2250 they gave us or some other dealer.  That same 500 gallons of oil at today’s prices would be $1345….   Are you starting to see where I am going with this? Think about all those that purchased 1000 or 2000 gallons… or more!)

What happens if the price of oil drops below the cap

price?

In some contracts, you pay the lower price. In others, you

will continue to pay the cap price.  (Chris Chase:  This is the one issue I have with this document.. while it is true that on some cap price budgets I know of, the budget payment is based on the cap price (and sometimes charged to account at that price, then the difference credited back)…. by definition… CAP is just that.. a CAP.. consumer pays up to the CAP.. no more… and less if it drops…  However,giving the state its due…. I have seen on at least one dealers website, where they called some program of theirs a CAP, and it really wasn’t)

Will I need to sign a written contract? How long does

the contract last?

Informed customers make better decisions. Ensure you

understand all the terms and conditions of the contract.

Read the small print carefully. (Chris Chase: Please do, on anything you sign.. We asked our customers to initial each page of the pre-pay contracts this year…  I am not looking forward to the end of pre-pay season this year)

Are there any penalties for ending a contract early?

Some contracts stipulate that if you end your contract

early you will be charged a termination fee.  (Chris Chase: usually a huge penalty)

What are your rights if the dealer ends your contract?

Call the Consumer division of the Massachusetts Attorney

General at 617-727-8400

Does the contract include customer services,

maintenance, service calls, inspections, furnace parts

or repair? Are there additional fees?

You may contract for either oil delivery only, or for oil

delivery and a service contract ( full-service ). If you

choose oil delivery only, you will need to arrange for

customer service. Full-service dealers generally offer

automatic delivery and operate service departments,

offering technicians and parts. Some offer installation.

The terms of service contracts vary. Usually, full-service

contracts entitle you to an annual maintenance visit,

emergency service, and free replacement of certain parts.

Installation services and 24-hour rapid response to “noheat”

calls may also be included. Some dealers may offer

coverage for tank replacement and other related services.

Payment Questions

Is there a pre-payment or deposit? How and when will

I be billed?

Some dealers may require full payment up front in order

to guarantee a fixed price. Others may accept partial

payment. Still others will allow you to pay-as-you-go,

typically on a monthly basis.

Do they offer budget plans?

You may be able to spread payments over the heating

season. The amount paid each month is based on the

estimated amount of heating oil the consumer is expected

to use throughout the heating season. ( Chris Chase:I have always advocated budgets for everyone… Heck, I am the VP and I am on a budget! )

Are there any discounts or bonuses available?

Some companies offer discounts based on early payment.

Some dealers provide discounts to the elderly.

—————————————-

So there you have it… My thoughts on the article…. I hope you have found it informative…