Cold Weather Improves Margins


Gray, Gray & Gray, LLP Certified Public Accountants, Westwood, Mass., recently released the results of the firm’s 23rd annual Oilheat Industry Survey. The survey was distributed to retail fuel oil and propane dealers throughout the Northeast and Mid-Atlantic regions of the U.S.

“This year’s survey results reflect the positive effect of a long and cold winter.  Oil sales and margins were both up and customer lists are growing at an increasing rate.  I am thrilled to see this upward trend, but many challenges still face oil and propane dealers and they need to be addressed for companies to remain viable,” said Joe Ciccarello, CPA, managing partner at Gray, Gray & Gray.


Some of the highlights of the 2014 Gray, Gray & Gray Oilheat Survey results include:

  • 48 percent of respondents report an increase in the number of customers their company serves, up significantly from the 31 percent who reported customer growth in 2013.
  • 32 percent of dealers report losing customers to gas conversions, continuing a trend of slowing losses to pipeline gas utilities. In 2013, 41 percent reported losing customers to gas, which was down from a high of 74 percent reporting customer loss to gas in 2012.
  • Sale of residential heating oil was up almost 3 percent over last year, and the average margin was up 3 cents to $0.63 per gallon.
  • Despite all the attention focused on the potential burdens imposed on businesses by the Patient Protection and Affordable Care Act, 98 percent of respondents say it will not affect them (61 percent won’t change their health care plan, and 37 percent have fewer than 50 employees and are exempt).

Complete oilheat survey results are available on Gray, Gray & Gray’s web site at:, or by calling (781) 407-0300.


Here are the complete results of the 2014 Gray, Gray & Gray Oilheat Industry Survey.

In what state does your company primarily do business?

23 percent       Massachusetts

29 percent       Pennsylvania

13 percent       New York

13 percent       Connecticut

5 percent         Maine

3 percent         New Jersey

10 percent       New Hampshire

1 percent         Maryland

1 percent         Vermont

5 percent         Rhode Island

2 percent         Virginia

2 percent         Delaware


Total number of employees:   16

Number of service technicians (full-time equivalent):      5

Number of delivery drivers (full-time equivalent):     4

What is the average HOURLY rate you pay?

Delivery Drivers                                             $20.00 per hour

Dispatchers                                                    $20.00 per hour

Customer Service Representatives            $17.00 per hour

Accounts Payable/Receivable Staff            $19.00 per hour

Service Technicians                                      $23.00 per hour

Service Manager                                           $29.00 per hour


How do you compensate Sales People?

21 percent – Straight salary (Avg. amount:  $54,507)

20 percent – Salary plus commission (Avg. percentage: 8 percent)

0 percent – Commission only


What will your approach be to meeting the health care mandates of the Patient Protection and Affordable Care Act?

61 percent – Continue offering our current health coverage

1 percent – Change health insurance plans

1 percent – Drop health insurance altogether

37 percent – We have fewer than 50 full-time employees and are not affected by health care mandates


Are you considering any of the following?

28 percent – Acquire another company

22 percent – Sell your company

19 percent – Transition to the next generation of family

9 percent – Conduct a business valuation

0 percent – Refinance

8 percent – Develop a bulk plant

10 percent – Upgrade an existing bulk plant

2 percent – Converting to an S Corporation

8 percent – Converting to flat rate billing for service

13 percent – Retire


How many fuel customers do you have?

Retail/Residential Heating Oil:            2,249

Commercial Heating Oil:                         160

Propane:                                                 1,653


In comparison to this time in 2013, has your customer list:

48 percent – Increased

24 percent – Decreased

28 percent – Same


To what do you attribute the gain or loss of customers since April 2013?

12 percent – Gained to increased advertising

2 percent – Gained due to acquisition

39 percent – Gained due to other reason


2 percent – Lost to competitor with similar pricing

12 percent – Lost to discounter

32 percent – Lost to gas conversion

8 percent – Lost due to other reason


In the past year, do you think gas competition/conversion has:

69 percent – Increased

5 percent – Decreased

26 percent – Same


In what range do your current receivables fall?

37 percent – Less than 30 days

53 percent – 30-60 days

7 percent – 60-90 days

3 percent – Over 90 days


Do you have a bank line of credit?

75 percent – Yes             Total line (from all banks) avg.: $1,046,418

25 percent – No


How many gallons of fuel did you sell during the heating season just ending?

Retail/Residential Heating Oil:            1,347,807

Commercial Heating Oil:                        287,950

Propane:                                                   790,920

Kerosene:                                                 105,190

Gasoline:                                                  994,100

Diesel:                                                       700,500


What was your average TARGETED margin for fuel sales during the heating season just ending?

Retail/Residential Heating Oil:             $0.63 per gallon

Commercial Heating Oil:                       $0.45 per gallon

Propane:                                                  $1.16 per gallon

Kerosene:                                                 $0.63 per gallon

Gasoline:                                                  $0.24 per gallon

Diesel:                                                       $0.39 per gallon


Which of the following do you offer to RETAIL customers?

45 percent – Fixed pricing

33 percent – Price cap

85 percent – Budget payment plan

55 percent – Service contracts

7 percent – Free oil for new customers (oil coupons)

8 percent – Free service for new customers

18 percent – Temperature monitoring device/alarm

11 percent – Tank monitoring system

31 percent – Tank protection plans

79 percent – Heating equipment service

78 percent – Heating system installation


Do you charge retail customers for price protection?

6 percent – Yes – For Fixed Price                   $0.25 per gal.  – $44 avg. fee

25 percent – Yes – For Cap Price                    $0.26 per gal. – $129 avg. fee

5 percent – Yes – For Down Side                   $0.27 per gal.

64 percent – Do not offer a price protection plan


Do your price protection plans offer a buyout option?

16 percent – Yes – Fixed amount ($392 avg.)

43 percent – No


Will you offer price protection plans next year?

44 percent – Yes

43 percent – No

13 percent – Not sure


If you hedge your price protection programs, what percentage do you hedge?

84 percent


What is your average RESIDENTIAL drop (gallons delivered per stop)?    165


What is the average renewal price you charge for a service contract?     $242


How many PAID service contracts do you have?      1,150


How many service calls were made last year?      2,979


Have you completed a merger or acquisition in the past 3 years?

8 percent – Retained gallons

8 percent – Cash at closing

84 percent – No


Do you have or are you planning to add alternative sources of revenue?

Already Offer         Plan to Add

Service Gas Equipment                              36 percent                   6 percent

Sell Propane                                                 25 percent                   1 percent

Sell Electricity                                                 8 percent                   1 percent

A/C Installation & Service                           50 percent                   2 percent

Plumbing Services                                       15 percent                   0 percent

Solar Installations                                          6 percent                   1 percent

Home Security Services                                1 percent                   3 percent

Other                                                                4 percent                   2 percent

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