Gray, Gray & Gray 2022 Energy Survey Results

Fuel dealers adopt new business strategies in response to labor challenges, rising costs

Energy industry accounting and advisory firm Gray, Gray & Gray, has released the results of its 2022 Energy Industry Survey.

“Energy dealers were facing pressure from multiple sources during the last heating season, but most saw their way to a successful year,” said Marty Kirshner, CPA, MSA, partner and chair of Gray, Gray & Gray’s Energy Practice Group. “Inflation, lingering pandemic restrictions, pricing uncertainty due to the Russian invasion of Ukraine, hiring problems – it has been one thing on top of another over the past 12 months. But energy people persevere, they adapt, they manage. Their optimism comes through in our survey results.”

The survey, which serves as a benchmark for fuel oil and propane marketers, was distributed to retail energy dealers throughout the U.S., who supplied operational and financial data for the heating season stretching from April 2021 through March 2022. Gray, Gray & Gray incorporated additional research from data analytics provider Angus Energy (survey responses with an * below denote data supplied by Angus Energy).

Some highlights from the results of the 2022 Energy Industry Survey include:

• Not surprisingly, hiring was a concern for many dealers: 80% said finding qualified workers was “very difficult” (46%) or “nearly impossible” (34%).
• It wasn’t just new hires that vexed dealers: 53% said that retaining existing employees was “somewhat difficult” while 18% found retention “very difficult.” They resorted to tactics such as wage increases (92%), bonuses (63%), and allowing more input into management decisions (19%) to help keep people on board.
• Despite these and many other challenges, most energy dealers remain upbeat about the future: 77% report they are “highly confident” (29%) or “confident” (48%) in their company’s ability to remain a viable energy provider.

Complete results of Gray, Gray & Gray’s 2022 Energy Industry Survey, including a breakdown by gallons, are available at gggllp.com or by calling 781-407-0300.

Total number of full-time equivalent employees? 28

Total number of full-time equivalent service technicians? 7

Total number of full-time equivalent delivery drivers? 8

*Number of customers per service technician? 827

What percentage of your delivery drivers are also cross-trained as HVAC technicians? 16%

What is the HOURLY rate you pay?
Delivery Drivers: $25.29
Service Technicians – Heating: $28.40
Service Technicians - A/C: $29.76
Dispatchers: $26.55
Service Manager: $36.40
Customer Service Representatives: $21.12
Accounts Payable/Receivable Staff: $23.43
CFO/Controller: $52.11
Bookkeeping/Accounting Manager: $28.16
General Manager: $48.16
Operations Manager: $40.55
Office Manager: $32.54
Sales Manager $35.31
IT Manager $38.22
HR Manager: $34.92

How much do you pay a salesperson for bringing in a new heating account? $133.75 per account

What commission do you pay a salesperson for bringing in a new equipment installation? 7%

Outside of payroll what operating expenses have increased the most in the last 1-2 years and why?
Updating software: 22%
Liability insurance: 41%
Health insurance: 57%
Cybersecurity insurance: 10%
Environmental: 6%
Vehicle: 65%
Other: 23%
Reasons given:

• Supplies and fuel costs
• Cyber threats
• Materials and parts costs

Retaining good employees over the past year has been?
Easy: 26%
Somewhat difficult: 53%
Very difficult: 18%
Nearly impossible: 3%

What are you doing to retain employees?
Raising wages: 92%
Converting hourly employees to salaried: 6%
Improving benefits: 42%
Paying bonuses: 63%
Increased 401k/pension contribution: 9%
Health insurance: 35%
More input in management decisions: 19%
Growth and promotion opportunities: 25%
Other: 5%

• Promoting a more familial atmosphere
• Freedom: they are not micromanaged
• Have a great training program that includes outside schooling

What did you do this year to retain employees that you did not do last year?
• Raises (increase wages)
• Training
• Bonuses
• Increased PTO
• 401K
• Additional benefits
• Retention bonuses
• Flexible schedules
• Floating holidays

Finding qualified new employees over the past year has been?
Somewhat difficult: 20%
Very difficult: 46%
Nearly impossible: 34%

What steps have you taken to hire qualified workers?
Offering higher wages: 81%
Signing bonus: 26%
More benefits: 23%
Flexible hours: 26%
More paid vacation time: 28%
Remote work: 8%
Training program: 39%
Tuition reimbursement: 22%
Other: 8%

• We pay people even when they are in school
• Free oil
• Employee referrals
• Make them a part of the team and make them feel appreciated
• Being a good place to work

Where have you had the most success in finding new workers?
Word of mouth referrals: 64%
Newspaper advertising: 3%
Online websites
(e.g., Monster, Indeed, etc.): 33%
Social media posts: 15%
Vocational and trade schools: 15%
Job fairs: 4%
No luck at all: 13%
Other: 4%

• Hiring signs outside office
• Industry networking
• Employment agency

What percentage of employee health insurance benefit is paid by the company?
Company pays 100%: 39%
Company pays 75% to 99%: 19%
Company pays 51% to 74%: 12%
Company pays 50%: 26%
Company pays 0% to 49%: 4%

If your customer list grew last year, to what do you most attribute the increase?
Better or more effective marketing: 33%
An acquisition: 5%
Better use of the internet or e-commerce: 5%
Other reasons: 57%

• Word of mouth
• Great service
• Aggressive pricing
• Poor competitor service
• Conversions
• Had tank inventory for generator installs

If you lost customers last year, to what do you most attribute their leaving?
Competitor with similar pricing: 3%
Competitor with lower prices: 40%
Gas conversion: 23%
Heat pump conversion: 15%
Other reasons: 19%

• Sold/moved
• Let them go
• Messed up
• Poor communication

At what point do you consider a customer “lost” and remove them from your customer list?
After no deliveries in 6 months: 1%
After no deliveries in 12 months: 38%
When they notify us in writing: 19%
We never take customers
off our customer list: 21%
Other: 21%

• Equipment pickup
• When they become a problem
• Home sale or death - inactivate account then delete if new owner does not start back up with us

*How long have your current customers been with your company?
Less than 1 year: 9%
1-2 years: 8%
2-3 years: 7%
3-4 years: 8%
4-5 years: 6%
5+ years: 62%

How are you protecting your business against a cyberattack and data loss?
Encrypted cloud-based data storage: 54%
Anti-malware software/endpoint protection: 71%
Secure data backup for disaster recovery & business continuity: 79%
Written information security plan (WISP): 22%
Staff training: 42%
Cybersecurity insurance: 38%
Not sure what I should be doing: 5%

Are you considering any of the following?
Acquiring a company: 52%
Selling your company: 15%
Transitioning to the next generation: 26%
Conducting a business valuation: 16%
Developing a new bulk plant: 27%
Retiring: 19%
Merging into a joint venture: 2%
Updating accounting software: 15%
Diversifying into a new product line
(e.g., generators, pest control, plumbing, etc.): 11%

If conducting a business valuation, what is the purpose?
External sale: 35%
Internal sale/gift: 30%
Family issues/divorce: 13%
Financing: 30%
Other: 13%

• Considering selling due to lack of new, qualified employees
• Anti-fossil fuel push by the state and federal government
• Interested in value of business
• Growth

What products or services are you considering adding in 2022?
Generators: 18%
Plumbing: 29%
HVAC: 35%
Propane: 47%
Fuel Oil: 18%
Electricity: 6%
Other: 12%

• Water filtration and drain services
• Handyman services

What are the three largest permanent business changes you have made in the last 12 months?

• Replaced old vehicles/added new vehicles
• Increased wages, vacation time, and personnel/management positions
• Upgraded IT, equipment, processes, propane storage
• Multiple acquisitions extending service areas and product line offerings

How has your business adapted with the challenges posed by the Russia-Ukraine conflict?
Maintained margin: 70%
Lowered margin: 23%
Communicated to customers via email: 28%
Posted communications on company website: 30%
Extended credit terms: 19%
Increased line of credit: 18%
Other: 19%

• Smaller deliveries/reduced minimum deliveries
• Contact customers - letters or calls
• Raised margins
• Extended pre-buy season to end in May instead of April
• Added more budget accounts

Given environmental concerns and the political climate, how confident are you in your company’s ability to remain a viable energy provider?
Highly confident: 29%
Confident: 48%
Somewhat confident: 15%
Not confident: 7%
Unsure: 1%

Are you a member of your state and/or regional industry associations?
Yes: 95%   No: 5%

Do you blend biofuel?
Yes: 28%   No: 72%

If yes, what percentage of biofuel blending? 18%

Is your organization ready to increase the percentage of biofuel blending?
Yes: 40%   No: 60%

How are you communicating that to your customers?
Word of mouth: 38%
Newsletters: 48%
Website: 62%
Not communicating it to our customers: 31%
Other: 14%

• Eblasts
• Radio
• Newspaper
• Association mailers
• Delivery tickets
• Invoices

Are you confident that all of your customers are aware that you blend biofuel?
Very confident: 13%
Somewhat confident: 59%
Not confident: 21%
Not sure: 7%

How many gallons did you sell during the heating season just ended?
Fuel Oil – Residential: 1,597,672
Fuel Oil - Commercial: 408,555
Heating Propane – Residential: 1,468,967
Heating Propane – Commercial: 425,937

What percentage of your customer list is on automatic delivery versus will call?
Automatic: 59%
Will call: 41%

What was your average margin on the following gallons sold during the heating season that just ended?
Fuel Oil – Residential: $0.82
Fuel Oil – Commercial: $0.53
Heating Propane – Residential: $1.26
Heating Propane – Commercial: $0.69
Propane – Grills: $3.23
Propane – Pool Heaters: $1.76
Propane – Autogas: $0.73
Propane – Agriculture: $0.45
Propane – Home Use
(cooking, laundry): $3.05
Propane – Generators: $2.39
Other: $1.16

What percentage of your active customers uses a budget plan? 20%

What percentage of your active customers uses a price protection plan? 23%

*How many gallons are price-protected as a percentage of gallons sold?
Cap price plan: 9%
Fixed price plan: 14%
Variable price plan: 78%

How many total deliveries did your company make in the last 12 months?
Fuel Oil: 30,211
Propane: 28,830

What is your company’s average gallons delivered per stop?
Fuel Oil – Residential: 161
Fuel Oil – Commercial: 382
Heating Propane – Residential: 157
Heating Propane – Commercial: 542

What is your company’s average customer tank size in gallons?
Fuel Oil – Residential: 275
Fuel Oil – Commercial: 1,000
Heating Propane – Residential: 500
Heating Propane – Commercial: 1,000

*What is your company’s average gallons delivered per stop in gallons?
Fuel Oil: 195
Stops per hour: 2.4
Gallons per hour: 474

Do you offer fuel oil tank monitoring?
Yes: 25%
No: 75%

If yes, what is the average annual fee? $111

Do you offer propane tank monitoring?
Yes: 76%
No: 24%

If yes, what is the average annual fee? $121

If yes and you lose a customer, do you pick up the tank monitor?
Yes: 49%
No: 2%
NA: 49%

In the last 12 months did you implement or increase a delivery fee to recover costs due to COVID, and are you planning on keeping this in place?
Yes: 12%
No: 82%
NA: 4%

Do you charge a delivery fee to propane customers?
Yes: 26%
No: 74%

If “yes” how much do you charge? $8.21

What is the average renewal price for a service contract on fuel oil equipment? $297

What is the average renewal price for a service contract on propane equipment? $307.31

What is the average hourly labor rate you charge for service?
Fuel Oil: $123.92
Propane: $118.19
Air Conditioning: $139.51
Plumbing: $154.70
Pipeline Gas: $138.36
Other: $107.50

What percentage of customer propane tanks do you own?
Aboveground: 80%
Underground: 55%

Do you charge annual rental fees for customer propane tanks?
Yes: 65%
No: 35%

If yes, what it the average fee? $106.68

Do you charge a minimal use fee for propane tanks?
Yes: 51%
No: 49%

If yes, what it the average fee? $135.75

How many customers have a multi-year contract on propane tanks?
For Aboveground Tanks: 45%
For Underground Tanks: 44%

How long is the average contract for customers that have a multi-year contract on propane tanks?
For Aboveground Tanks: 5 years
For Underground Tanks: 4 years

Do any of your fleet vehicles currently operate on propane autogas?
Yes: 17%
No: 83%

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