By Richard Rutigliano, PriMedia, Inc.
If natural gas pipeline opponents succeed in defeating both the Northeast Energy Direct and the Access Northeast natural gas pipeline projects, a new day for heating oil will arrive.
Many heating oil companies in New England have been fighting for survival against aggressive natural gas utilities, and those utilities had been poised to gain surplus gas supplies until last month, when a Massachusetts court shut down the pipeline funding mechanism. Without those new pipelines, natural gas expansionism becomes terrible public policy.
New England has been aggressively phasing out coal and nuclear power plants and replacing that lost capacity with natural gas-fired generation. If the utilities lack adequate natural gas to meet electricity demand, as they have claimed loudly for years, how can any lawmaker continue to support state sponsorship of heating fuel conversions? Shifting more of the building heat load to natural gas would only aggravate the supply problem.
The heating oil industry has rarely received the support it deserves from state governments, particularly in recent years when heating oil associations were vigorously pursuing mandates for cleaner fuels. Instead of helping our industry build a bridge to cleaner energy supplies, lawmakers have consistently worked to phase out heating oil. They have also failed to acknowledge that heating oil is a critical part of the energy mix in a region where natural gas conversion is an unrealistic goal for millions of customers.
Kinder Morgan has already pulled the plug on the Northeast Energy Direct pipeline, which would have run through portions of New York, Massachusetts and New Hampshire. Spectra Energy, meanwhile, insists it will continue to pursue the Access Northeast, but many observers believe the project is on its deathbed. The Massachusetts Supreme Judicial Court in August shot down the option of ratepayer subsidies, and Eversource and National Grid immediately backed away from their commitments to the project, which would traverse New Jersey, New York, Connecticut, Rhode Island and Massachusetts.
Is Opportunity Knocking?
The natural gas pipeline debacle is the latest in a series of important shifts that have recast the debate over home heating fuel choices in the Northeast. The other major developments involve pricing and the environment.
The price gap that developed between heating oil and natural gas from 2008 to 2014 closed over the last two years, and heating oil prices fell back to 2004 levels as North American supplies expanded.
Meanwhile, the popular notion that natural gas is a cleaner fuel than heating oil is ripe for debunking. Natural gas has come under increasing scrutiny because methane, the primary component of natural gas, is a potent greenhouse gas that leaks into the atmosphere throughout production and distribution. Meanwhile heating oil is transitioning to Bioheat® fuel blends using ultra-low sulfur fuel, which burn with cleaner emissions than natural gas.
With natural gas pipeline expansion potentially off the table, there is opportunity for the state associations and the New England Fuel Institute (NEFI) to stay on the offensive. For example, the Connecticut Energy Marketers Association staged a March on Hartford event in February. CEMA members were sick of taking it on the chin from Gov. Dannel P. Malloy’s extremist pro-natural gas agenda, and they staged a successful grassroots lobbying blitz on state legislators to erode support for Malloy’s plan.
Heating oil companies are important contributors to their state economies, and deserve the government’s support as they work to deliver eco-friendly fuels. The heating oil industry’s plan for reduced greenhouse gas emissions also leverages equipment that is in place in millions of homes and requires no infrastructure build-out at the public’s expense.
Rather than favor natural gas heating with grants and incentives that exclude heating oil customers or divert federal heating assistance to pay for fuel conversions, government agencies should embrace heating oil. They should also provide financial incentives that assist heating oil customers in moving to more efficient equipment.
Government agencies should aggressively support the heating oil industry’s plans for Bioheat® fuel. Our industry is developing a path away from fossil fuels that many New Englanders would embrace if state agencies got on board and helped spread the word.
There is a strong case to be made for heating oil in 2016, and industry leadership should commit to a vigorous public relations campaign using the voices of heating oil marketers and their allies to transform the image of heating oil. Our fuel should be seen for what it is: a clean, flexible energy source that perfectly meets New England’s needs; and a product delivered by independent, local companies that are truly responsive to their customers’ needs.
The Marketer’s Role
While the associations lobby for better treatment at the state and federal levels, each individual marketer must continue to focus on its own home front. Heating oil delivery is a core function of the business, and companies want to keep the accounts they have and add new sales whenever possible.
It is ironic that heating oil sales are concentrated in one of the most liberal, environmentally conscious regions of the country. The customer lists at many heating oil companies are undoubtedly peppered with people who would describe themselves as very concerned about climate change and the continuing usage of fossil fuels.
If you sell heating oil in one of the “blue states,” it makes sense to evaluate every signal you are sending to your customers and the market at large and make sure you are doing right by yourself. This is particularly important if heating oil is your core product and your profitability depends on keeping the accounts you have and gaining some more.
Here are some suggestions to help marketers thrive and sell heating oil to customers who have mixed feelings about fossil fuels.
• First, do no harm. Make sure that there is no hint of climate change skepticism emanating from your company at any public level. As with all things retail, the customer is always right, and any sign of contempt on this emotional topic could cost you precious accounts. Customers would stop doing business with you or avoid you in the first place, and you would probably never know why. If your personal beliefs are getting in your way on this issue, entrust your image and messaging to an agency, heed their good advice, and enjoy the company’s success.
• Consider an image overhaul. Any company whose name still includes “oil” or “fuel” should ask themselves whether the name fits. If you offer service work to non-fuel customers, or you would like to do that, the fuel-centric name could be a hindrance, as it may turn off some customers or cause them to underestimate you. It is always good for business to have a clean, modern image, no matter who your target buyers are.
• Optimize your strategies for selling new equipment. Begin by focusing on your own priorities. Are you a fuel company first or a service company? Where do equipment sales fit in your business model? Is your top priority keeping your Oilheat accounts? Or are you more interested in keeping a customer’s business regardless of how much oil they buy?
If it is a high priority to prevent fuel conversions and keep customers on oil, it makes sense to focus intensely on your sales process and figure out how to score more victories. Take a positive, purposeful approach that targets specific opportunities. For example, for customers who have Oilheat systems well past their primes, develop a proactive outreach strategy that truly aligns with your goals.
If you consider those sales a maximum priority, quantify the potential value of an equipment sale to your company. In doing so, you may realize that it makes sense to invest substantially to make those sales happen. If so, develop a sales and marketing strategy that creates a great customer experience. Maybe you want to make contact with each customer on that list and get a salesperson in the home as soon as possible. Develop a special offer. Develop supporting materials that are written specifically to address fossil fuel skepticism. Leave no stone unturned.
• Appeal directly to fossil fuel skeptics. The idea of an oil company appealing to people who don’t like fossil fuels might seem absurd, but it’s actually practical and advisable, and a lot of successful companies are already doing it.
For starters, we all know that oil delivers excellent benefits, such as powering automobiles, keeping homes comfortable on frigid nights, and making electricity available 24/7. Fossil fuel skeptics are often more bark than bite: They fuel up at gas stations, heat their homes with oil, and use lots of electricity. This means that they accept some ambiguity and understand that getting off fossil fuels is more of a relative concept than an absolute. As such, they are open to the concept of incremental improvements, and the positive Oilheat message is all about that.
The fact of the matter is that you are part of the solution. Consider all the ways your company might be helping people use less oil:
• Installing high-efficiency equipment that delivers the same heat with less oil.
• Installing heat pumps that reduce the load on the oil-fired system.
• Providing energy audits and building shell services that reduce the heat load.
• Selling reduced-sulfur fuel that improves efficiency, which helps the boiler or furnace deliver the same heat with less oil.
• Selling Bioheat blends that directly displace petroleum and reduce fossil fuel consumption.
• Through Bioheat sales, providing the potential to drastically reduce fossil fuel consumption in the future by raising biodiesel blend levels.
In addition to directly reducing fossil fuel consumption, Oilheat companies are also providing excellent related benefits that fossil fuel skeptics can appreciate just like everyone else:
• Keeping customers comfortable.
• Guiding customers on home comfort and energy usage.
• Contributing to the welfare of the community.
• Providing jobs.
If your business depends on maintaining relationships with customers who would prefer to get off oil, it makes good business sense to position yourself proactively as a solution provider and a positive presence in customers’ lives. Consider updating your key messaging components (company description, tagline, website home page) to emphasize your role in reducing fossil fuel consumption. It’s a great way to get people to embrace you as a smart, progressive service provider instead of an “oil company.”
• Be an advocate. Customers admire companies that believe in what they do. You can make a real difference for your company and your industry by being a conspicuous advocate for Oilheat and Bioheat. Get involved with your state association and NEFI and work to get more favorable treatment for the industry and its customers at the state level.
As you participate, promote your activism in all your marketing channels to show your customers and prospects that you believe that Oilheat is an invaluable component of the regional energy mix. You will be making the company look good while opening people’s eyes and encouraging them to see Oilheat in a new light.
To attract lots more attention with your advocacy, write articles for newspapers, magazines and websites and make appearances on television and radio stations.
• Ramp up your community involvement. Your advocacy for Oilheat will look best in a larger context of supporting community organizations, particularly ones focused on outdoors and the environment.
• Be consistent in your communications. As always, you have a limited budget to create impressions, so it’s important to send the same pro-Oilheat signals in every channel: website, directory listings, newsletters, Facebook, company vehicles, emails, message on hold, etc. At the same time, develop a set of talking points and spend time helping everyone in the company to deliver the same positive message.
PriMedia can help you connect effectively with fossil fuel skeptics via websites, videos, social media, public relations, ghostwriting, advertising and more. To get started, please give me a call at 800-796-3342 or email me at email@example.com.