Just how fragile is the heating oil supply chain ?

With news that London’s biggest oil refinery is in liquidation and predictions of significant price rises in the South East as a result, I started thinking about how fragile the heating oil supply chain really is.

We saw during the 2010/2011 winter how the snow affected the amount of oil leaving refineries and the huge spike in the oil price that resulted from this breakdown (80 pence per litre was not uncommon). The Coryton refinery has failed financially and its owner, Petroplus, cites decreased demand for oil as the primary reason.

As a write this:

- Wincanton drivers are striking which will disrupt supplies to 380 Jet forecourts

- Iran is poised to shut off the Strait of Hormuz.

- The average price for heating oil right now is 60p for 500 litres and this is not a spike because demand is low.

So what does the future hold for those of us reliant on oil ? It strikes me that it takes very little to disrupt the supply chain. The margins for most players in the heating oil industry are low. Therefore refineries, oil suppliers and hauliers are all operating very lean business models. A small change in demand, severe weather conditions or strikes can have a major impact on the capacity to deliver oil to consumers and therefore the price is highly volatile.

If we add to this the sensitivity of the underlying crude oil price to political changes in the Middle East then we have a potential crisis in the making.

At WhichOilSupplier we would urge consumers to plan to reduce their reliance on heating oil. We predict that the 60p mark will be the base line price for 2012 but expect this to rise as the Iranian situation escalates. Although not much oil in the UK hails from the Strait of Hormuz, its closure would cut off about 20% of oil shipped globally. Any disruption will cause a panic and global prices will soar.

If you have a wood burner, we recommend you stock up now with logs with a view to using them next winter. If you do not have a burner, we recommend you buy one with a back boiler and run your hot water and central heating from it. The days of 40p per litre have now gone so we either accept that our heating oil costs have risen by 50% in two years and pay the price, or we plan to heat our homes some other way.

All rather depressing…

Craggs Energy are Now Selling Heating Oil via WhichOilSupplier

We are pleased to announce that another heating oil supplier, Craggs Energy, has decided to sell their oil via our heating oil comparison website www.WhichOilSupplier.co.uk.

“Building on a strong reputation earned in the industry during the 1980′s Ralph and June Thornber have teamed up with their daughter Heidi and son-in-law Chris Bingham to create Craggs Energy. Ralph Thornber formerly co-owned Townson Thornber and sold out to Shell in 1988, his experience and knowledge of the industry has inspired him and his family to launch back into the local industry again.

With a shared vision to develop a local fuel distribution business synonymous with quality and reliability they are committed to delivering a simple customer promise – We will make sure our pricing structure is clear and we will deliver your fuel within three working days. We are currently working on a same day or next day delivery and plan to launch our Renewable Energy department in February 2012.”

To see what great savings www.WhichOilSupplier.co.uk could make for you why not visit our homepage and compare prices of this supplier and many others.

Moorland Fuels are Now Selling Heating Oil via WhichOilSupplier.co.uk

We are pleased to announce that another heating oil supplier, Moorland Fuels, has decided to sell their oil via our heating oil comparison website www.WhichOilSupplier.co.uk.

Moorland Fuels was formed more than 15 years ago. The company started by supplying lubricants throughout the South West. Moorland Fuels is still a family-run business. Their reputation has been built by a team of dedicated drivers and staff. They all believe in what they do and this can be seen in their commitment to excellent service.

To see what great savings www.WhichOilSupplier.co.uk could make for you why not visit our homepage and compare prices of this supplier and many others.

Behzad Fuels (UK) Ltd are Now Selling Heating Oil via WhichOilSupplier.co.uk

We are pleased to announce that another heating oil supplier, Behzad Fuels (UK), has decided to sell their oil via our heating oil comparison website www.WhichOilSupplier.co.uk.

Behzad Fuels (UK) Ltd provide heating oil deliveries in the South East of England. They are based just on the outskirts of London in the middle of an Industrial area in Rainham, Essex

To see what great savings www.WhichOilSupplier.co.uk could make for you why not visit our homepage and compare prices of this supplier and many others.

Elite Fuel Oils are Now Selling Heating Oil via WhichOilSupplier.co.uk

We are pleased to announce that another heating oil supplier, Elite Fuel Oils, has decided to sell their oil via our heating oil comparison website www.WhichOilSupplier.co.uk.

Elite Fuels are dedicated to providing the best possible price every day of the week. The customer is of paramount importance to them and they strive to meet all the requirements to make sure each delivery of heating oil goes smoothly.

Elite Fuel Oils is an independent supplier of home heating oil to the South East region.

To see what great savings www.WhichOilSupplier.co.uk could make for you why not visit our homepage and compare prices of this supplier and many others.

Standard Fuel Oils Are Now Selling Heating Oil Via WhichOilSupplier

We are pleased to announce that another heating oil supplier, Standard Fuel Oils, has decided to sell their oil via our heating oil comparison website www.WhichOilSupplier.co.uk.

Standard Fuel Oils is a new independent supplier of home heating oils to the North West region. They are an independent family owned company.

To see what great savings www.WhichOilSupplier.co.uk could make for you why not visit our homepage and compare prices of this supplier and many others.

OFT says heating oil users need consumer law enforcement but not regulation

The OFT today published the findings of its off-grid market study. It showed that on the whole competition works well, with consumers offered a good choice of suppliers, and that the off-grid sector does not need price regulation.

However the OFT does have concerns that some heating oil and possibly some other off-grid fuel suppliers may not be treating their customers fairly and is currently examining practices further.

Four million households rely on off-grid energy such as heating oil, liquid petroleum gas (LPG) and, more recently, microgeneration which encompasses renewable energy sources like solar panels.

When looking at heating oil, the OFT found the primary driver of price increases to be the crude oil price, which accounts for over 90 per cent of the variation in the retail price of heating oil.

The OFT also specifically looked at why some heating oil customers experienced high prices during last winter. It found that a sudden increase in demand (up 40 per cent on the previous year), at the same time as deliveries were hampered by the severe weather, led to a short lived ‘price spike’. However, with 97 per cent of off-grid households living in an area served by at least four suppliers, the OFT found that competition has constrained prices over the year as a whole and that profit margins have not been excessive.

The specific OFT concerns about consumer protection in the off-grid energy sector include:

The OFT received complaints that some suppliers were charging a different price on delivery from that quoted when the order was taken. The OFT is currently examining this and related practices.
During the study it received complaints that people may be locked into expensive LPG contracts following an initial introductory rate, and it is working with the industry to resolve this matter.
There were also some concerns surrounding the potential for mis-selling of solar panels. The OFT will work with the industry code operator to monitor complaints and ensure they are properly handled, and when necessary will take steps to address unfair commercial practices.
During the market study, the OFT took action against certain heating oil companies and price comparison websites to improve website transparency and prevent consumers being misled when searching online for heating oil supplies. Following this action, transparency has improved further for households buying heating oil, as some traders have also changed their practices so that people are better informed about which company owns heating oil brands.

Clive Maxwell, OFT Executive Director, said: ‘We looked at both competition and consumer issues as part of this comprehensive study, and whilst there seems to be a good choice of suppliers across most of the country, we have real concerns about whether consumer protection law is being complied with in all cases.

‘It is important that the off-grid energy sector works well and that people who rely on it are protected, which is why we have already taken action to increase transparency on websites and are currently undertaking a wider examination of pricing practices.’

Cameron’s Energy Summit Shuns 2 million Heating Oil Consumers

The publicity surrounding the Coalition Government’s Energy Summit has completely ignored a substantial proportion of the UK population that has no interest in gas & electricity bills, because they rely on heating oil for cooking and central heating.

Around 2 million people in the UK, primarily those in the countryside who are off-grid, have been left somewhat bewildered by the lack of interest in their plight this winter. There is no equivalent to Ofgem in the unregulated heating oil market and no recognised consumer lobbying group to represent this section of society.

We are starting a national petition to force the energy minister Chris Huhne to look at providing subsidies to heating oil consumers. These subsidies would allow people to trade up small single skin oil tanks to larger double skinned tanks that hold 2,500 litres. The majority of rural houses have a relatively small capacity oil tank that is incapable of seeing families through the winter period. As a result they are forced to refill when kerosene prices are at their peak during December and January.

Unlike the gas and electricity markets, heating oil users must pay up front for their fuel and the sums involved are prohibitive for low-income families. For example, at today’s prices a 2,500 litre tank would cost £1,575 to fill up. We therefore urge Mr Huhne to introduce an Government managed saving scheme to run alongside tank improvement subsidies, so that families can pay in every month toward the cost of their winter order of heating oil.

Which Oil Supplier interviewed by national press and local radio to comment on the heating oil market

It has been a busy week for us at WhichOilSupplier. We have been quoted in press articles in The Daily Telegraph, Daily Mail and Northern Echo and this morning we appeared live on Radio Cumbria’s breakfast programme.

If you wish to write an article for your village website, specialist magazine or need content for a local radio station please contact chris@whichoilsupplier.co.uk – we are happy to provide press releases or send one of our team to assist you with background information on the heating oil market and strategies to cope with the coming winter, should it turn out to be a harsh one.

Here is the podcast from Radio Cumbria (only live for a few more days): http://www.bbc.co.uk/iplayer/episode/p00kqmxp/Ian_Timms_18_10_2011 – interview starts at 42.37 and ends at 47.40

Here is the article in the Daily Mail: http://www.dailymail.co.uk/news/article-2048971/Heating-homes-cost-winter-predictions-Arctic-winter-lead-possibility-major-spike-oil-prices.html

Britain faces a mini Ice Age according to scientists

An article in the Express a few days ago may trigger panic buying of heating oil this month. Copied below is some of the article but please click on the image if you want to read the whole piece.

“BRITAIN is set to suffer a mini ice age that could last for decades and bring with it a series of bitterly cold winters.

And it could all begin within weeks as experts said last night that the mercury may soon plunge below the record -20C endured last year.

Scientists say the anticipated cold blast will be due to the return of a disruptive weather pattern called La Nina. Latest evidence shows La Nina, linked to extreme winter weather in America and with a knock-on effect on Britain, is in force and will gradually strengthen as the year ends.

The climate phenomenon, characterised by unusually cold ocean temperatures in the Pacific, was linked to our icy winter last year – one of the coldest on record.

And it coincides with research from the Met Office indicating the nation could be facing a repeat of the “little ice age” that gripped the country 300 years ago, causing decades of harsh winters.

The prediction, to be published in Nature magazine, is based on observations of a slight fall in the sun’s emissions of ultraviolet radiation, which may, over a long period, trigger Arctic conditions for many years.

Although a connection between La Nina and conditions in Europe is scientifically uncertain, ministers have warned transport organisations and emergency services not to take any chances. Forecasts suggest the country could be shivering in a big freeze as severe and sustained as last winter from as early as the end of this month.

La Nina, which occurs every three to five years, has a powerful effect on weather thousands of miles away by influencing an intense upper air current that helps create low pressure fronts.”

Cooke Fuels Are Now Selling Heating Oil Via WhichOilSupplier

We are pleased to announce that another heating oil supplier, Cooke Fuels, has decided to sell their oil via our heating oil comparison website www.WhichOilSupplier.co.uk.

Cooke Fuels was founded in 1845 and operates from its base in North East Lancashire. They are one of the UK’s largest independently owned fuel distributors.

They currently provide heating oil deliveries, via WhichOilSupplier, to Huddersfield and Wakefield.

To see what great savings www.WhichOilSupplier.co.uk could make for you why not visit our homepage and compare prices of this supplier and many others.

We love feedback from heating oil consumers !

WhichOilSupplier is all about the consumer and we encourage as much feedback as possible, otherwise how can we improve our service ? Whenever a customer orders heating oil through our site we follow up two weeks later with an email. We ask customers to rate the service, not just our comparison site but also the efficiency and politeness of the oil supplier’s customer services department and their driver.

Yesterday we received an email from Graham Grant. who lives Yorkshire. This was unsolicited feedback and Mr Grant sent us the following message, having just ordered 650 litres of kerosene:

“Guys

Great site. Used it the first time tonight and very easy. Smart move not to include a payment engine – that’s a clever way of keeping your costs down.

After the debacle last year during the price spike and the publicity that boilerjuice is in fact owned by one of the supply majors, it’s great to see an independant intermediary get started. What’s better is your price beat boiler juice and I’ve never yet found any one cheaper than them – so well done.

I’ll be coming back next time!!!

Cheers

Graham”

One of the reasons that the prices shown by (named) suppliers on our site are so low is because we do not receive any commission from them, so we are not eating into their (small) profit margin. Although this means it will take us a long time to claw back the costs of developing Which Oil Supplier, it means we are offering a really excellent public service to consumers in an industry that is currently unregulated.

Graham actually emailed again to suggest that we create an ‘Advice’ section on the site, eg covering servicing, tank installation, security. We are looking into this over the next few weeks. If you have any ideas on how to improve the site, do please get in touch by clicking this link:

DCC to sell Boilerjuice back to former owner, Paul Ward

It was disclosed in the Daily Telegraph today that DCC intends to sell the website Boilerjuice back to one of its original owners (and current Managing Director), Paul Ward. DCC is rumoured to have paid over £1 million for the site and this major U-turn comes just a few weeks after OFT criticisms and before a formal report into the heating oil market later this month.

The Telegraph quotes a DCC representative as saying “Boilerjuice was, and remains, an independent price comparison website, comparing our prices and those of hundreds of independent suppliers to offer buyers the best prices in their area. Unfortunately, this independence was questioned by some quarters of the media, albeit incorrectly, because of our ownership of the site. We have therefore sold Boilerjuice to its managing director, Paul Ward, and wish him continued success at giving consumers a truly independent means of finding the best prices.”

Here at WhichOilSupplier we are very much looking forward to reading the OFT report when it is published in the next few weeks. We passionately believe in transparency and hope that any recommendations that come out of the report will help consumers get clearer information about heating oil prices. We would like to make a number of points about WhichOilSupplier:

The Heating Oil Price Comparison Site WhichOilSupplier.co.uk

- does not charge the consumer to use the site

- does not charge any supplier to the use the site (no commissions, no annual fee, no nothing)

- does not take payment or credit card information from any consumer ordering oil

- shows consumers the logo of the supplier alongside each price

- pays for the running of the site through google advertising

- is fundamentally a public service site that puts the consumer first

Our price comparison site works with some of the finest independent oil suppliers in the UK – companies who believe in excellent customer service, who work hard to win repeat business from consumers and who offer fair prices for heating oil. We are proud to work with these companies, many of whom are family run, and we thank Oil NRG, Celtic Fuel Oils, Cooke Fuels, Countrywide, Monument Fuels, Birmingham Fuel Oils, Potteries Fuels, FC Dawes & Son, Three Counties Fuel, Highland Fuels, Peak Oil and Chandlers Oil & Gas for their support of WhichOilSupplier, which we launched in January 2010.

DCC domination of UK Heating Oil Market continues with acquisition of Total Butler business (an additional 670 million litres of oil to add to their turnover)

DCC plc has reached conditional agreement with Rontec Investments LLP (”Rontec”) to acquire certain oil distribution assets currently owned by Total in Britain, the Isle of Man and the Channel Islands (”the Acquired Businesses”). Rontec reached conditional agreement in June 2011 to purchase the Acquired Businesses as part of a larger transaction with Total. DCC’s acquisition is conditional on Rontec completing its transaction with Total, which is expected to take place in late 2011.

The Acquired Businesses together employ 550 people and sold 1.5 billion litres of fuel in 2010.  The key components of the Acquired Businesses are:

·     The trade, fixed assets, stock and goodwill of Total Butler, a transport, commercial and home heating oil distribution business with sales volumes in 2010 of 670 million litres.  Total Butler has a network of 40 depots across England and Wales and a fleet of circa 200 leased delivery vehicles.

·     Contracts to supply transport fuels to circa 300 dealer owned dealer operated retail service stations (currently branded Total).  Volumes sold under these contracts in 2010 amounted to 710 million litres.
The entire issued share capital of Total’s oil distribution and retail service station businesses on the Isle of Man and the Channel Islands.  In 2010, together these businesses sold 120 million litres of fuel.
The expected total consideration payable by DCC for the Acquired Businesses together with the estimated value of stock to be acquired is €67 million (Stg£59 million), and will be satisfied in cash at completion. The goodwill at completion will be approximately €43 million (Stg£37 million).

To see our article about the original acquisition of Total Butler by Rontec earlier this year, please scroll down this page.

Oil NRG Are Now Selling Heating Oil Via WhichOilSupplier

We are pleased to announce that another heating oil supplier, Oil NRG, has decided to sell their oil on our heating oil comparison website www.WhichOilSupplier.co.uk.

Oil NRG is a privately owned independent company dedicated to providing a service that is traditional, flexible and personal. They currently provide heating oil deliveries, via WhichOilSupplier, to all areas within the TS and DL postcodes.

To see what great savings www.WhichOilSupplier.co.uk could make for you why not visit our homepage and compare prices of this supplier and many others.

Monument Fuels Are Now Selling Heating Oil Via WhichOilSupplier

We are pleased to announce that another heating oil supplier, Monument Fuels, has decided to sell their oil on our heating oil comparison website www.WhichOilSupplier.co.uk.

Monument Fuels has been set up by Andrew Hewitt and Trevor Rolph, together they have over 35 years experience in the oil industry. Unlike many small distributors, Monument Fuels has its own storage facilities and has been structured to service the smaller customer.

Monument Fuels cover areas within the TA, BA and EX postcodes. To see what terrific savings www.WhichOilSupplier.co.uk could make for you why not visit our homepage and compare prices of this supplier and many others.

Office of Fair Trading reports on investigations into Boilerjuice, Fuelfighter and CheapHeatingOil

I have copied below a press release from the OFT, issued today. This report vindicates the strategy at WhichOilSupplier to be completely transparent and we are still the only heating oil comparison site to actually show the customer whom they are ordering oil from.

Hopefully this report will make oil companies see sense and stop trying to operate a quasi comparison site as a feeder for their own oil business. This sort of vertical integration of businesses is not in consumers’ interests and should end now. We also believe the real comparison sites operating in the heating oil market should follow our lead and show the oil company logos alongside any price quoted.

Here is the press release:

The OFT has taken action to prevent consumers being misled when searching online for heating oil supplies.

The OFT found that some websites offering to find consumers the best price for heating oil were not clear about whether they were price comparison sites or sites for ordering heating oil directly from a single supplier.

The OFT has secured undertakings under the Consumer Protection from Unfair Trading Regulations (CPRs) from WCF Fuels Limited and Boiler Juice Limited which prevent them from engaging in business practices that could be misleading.

This follows an OFT investigation which found that:

WCF Fuels Limited, which operates the website fuelfighter.co.uk, claimed to make price comparisons but only quoted prices for its own products and services. It also used false customer testimonials on the site.
boilerjuice.co.uk, operated by Boiler Juice Limited, whilst a price comparison website providing price quotations from GB Oils Limited well as price quotations from other non-related heating oil distributors, was not transparent about its links to parent company DCC plc, which owns GB Oils Limited, the largest heating oil distributor in the UK.
The businesses investigated have co-operated with the OFT’s investigations and voluntarily made changes to their websites.

The investigation was carried out in connection with an OFT market study into the supply of energy to the four million households who are not connected to the mains gas grid. The outcome of this study will be published in October 2011.
Clive Maxwell, Executive Director at the OFT said:

‘Our investigation has aimed to ensure that any relationships between businesses supplying heating oil and websites are transparent and that the number of prices that have been compared by the website is stated prominently.

‘It is important that people can genuinely shop around and make informed decisions about which suppliers to use. The changes that we have secured mean that people buying domestic heating oil will be better able to compare deals on offer.’

NOTES

WCF Limited runs the fuelfighter.co.uk website. It claimed to be a price comparison website but did not operate as such. The website has been changed to reflect its operation as a website to order fuel from WCF Limited. The company and directors have signed formal undertakings as to future conduct.

Boiler Juice Limited, the business behind the price comparison site boilerjuice.co.uk, made  changes to its website to make its ownership by parent company DCC plc clear. Other changes to the website include changes to the quotation process so consumers can see how many firms are providing quotations. The company and directors signed formal undertakings as to future conduct.

A letter of advice has been sent to Johnston Oils Limited, owners of cheapheatingoil.co.uk who made changes to cheapheatingoil.co.uk.  

The undertakings provided relate to alleged breaches of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).
CPRs contains a general prohibition against unfair commercial practices and, in particular prohibitions against misleading actions, misleading omissions and aggressive commercial practices. The Regulations are enforceable through the civil and criminal courts.

All the businesses investigated have co-operated with the OFT investigations.

Some feedback from one of our preferred suppliers, Celtic Fuel Oils

We regularly publish feedback from customers who order oil through WhichOilSupplier, but we received a really nice email from one of our suppliers yesterday, Celtic Fuel Oils, who were happy to provide us with a testimonial:

“As an independent supplier it is important for us to be able to spread the word about our service, our family-run ethos and our highly competitive pricing for heating oil. WhichOilSupplier has helped us tremendously in reaching new national customers who prefer to order online and compare prices. The team behind WOS are highly supportive and believe in providing excellent customer service, which fits well with our own values.”

Jerry Haslett, Celtic Fuel Oils Ltd

To get a quote this winter from Celtic Fuel Oils please click here . They cover about 65% of the UK.

September – a time to go shopping for heat !

Yesterday I received three deliveries to our remote farmhouse in County Durham – wood, oil and coal. It seems I am not alone because orders through WhichOilSupplier spiked at the end of August. I think many people, like me, were hanging on for the price to drop below 50 pence. Now that the cold is setting in and demand will inevitably rise, it seems very unlikely that we will see prices in the 40s.

I ordered 1,400 litres at 53 pence , got 8 bags of coal (mixed) and 7 large loads of hardwood. This will last me for 12 months so I thought it might be interesting to work out the cost to heat a cold, detached house with poor insulation that sits on the top of a hill:

• Heating Oil – £779
• Hardwood – £770
• Coal –  £96

Total cost £1,645

I suspect this compares pretty well to an equivalent house using primarily gas or oil. We have a back boiler on our stove so the wood is the primary source of heat and hot water. The oil is used to get hot water if there is a rush and the coal just keeps the stove ticking over.

The downside is that there is a lot of work involved in stacking, moving and loading logs for 2/3 wood burners. I would be interested in hearing from anyone else who has costed out their yearly heating bill.

Heating Oil Orders via WhichOilSupplier 40% Higher Than Forecasted

2011 has already been a busy year for WhichOilSupplier and it is not even September yet. The WhichOilSupplier site has seen significant increases in visitor numbers, several new suppliers join and the number of heating oil orders processed increase beyond all forecasts.

The new suppliers that are now working with WhichOilSupplier include Birmingham Fuel Oils, Countrywide and Celtic Fuel Oils. WhichOilSupplier is also in ongoing discussions with several other suppliers that are interested in adding prices to the site.

As a result of increased visitor numbers and more suppliers adding prices, WhichOilSupplier is delighted to announce that the number of heating oil orders processed through its site in 2011 so far is 40% higher than forecasted.

If you have not used WhichOilSupplier before visit www.WhichOilSupplier.co.uk to get a heating oil quote today.