Angling for Fuel Oil Price Protection
www.newsday.com Henry Gilgoff To contact "It's Your Money," send e-mails to hgilgoff@newsday.com or write Henry Gilgoff, Newsday, 235 Pinelawn Rd., Melville, NY 11747- 4250.
March 2, 2003 Even as energy costs surged this winter, thousands of the region's home heating oil customers have taken some solace from a buffer they had built from the full rise in retail prices. Joy Garofalo counts herself among them. By now, consumers know some of the reasons offered up for the high price of home heating oil, including unusually cold temperatures, concerns about war with Iraq, and the turmoil in the oil-producing country of Venezuela. Garofalo, 51, finds it hard to believe America can't do more to protect itself from price spikes. "I think we have the brain power to be more self-supporting as a country," she said. Meanwhile, Garofalo has taken some steps to protect herself. She expects her next oil delivery to cost her no more than $1.299 a gallon - even though she paid $1.829 a gallon on Feb. 5. The high price found in one state sampling of dealers last Monday was nearly $2.10 a gallon on Long Island and in the city. The average reported for the Island was $1.952, and $1.987 in the city. But, as you will see, Garofalo has tapped price-discount programs, which were not included in the survey done by the state Energy Research and Development Authority. She has also protested when the price charged her exceeded what she thought would be the maximum. The purchases Garofalo has made to heat her Garden City home give a glimpse into the myriad pricing arrangements that exist. The questions she raised about a "ceiling" price underscores the need to understand those deals, whether arranged through any of the region's buyers groups or made directly by a consumer with a heating oil dealer. Kevin Rooney, chief executive of the Oil Heat Institute of Long Island, a trade group, said some dealers have aggressively marketed pricing options in recent years, and others have grown more accepting of them as they compete to retain customers. The programs, which vary, can come with conditions like volume- purchase requirements. A fixed price, applied without change for a heating season, may be one option offered by a retailer, but it comes with a gamble for a consumer if the price otherwise charged falls below what has been agreed upon. Garofalo, a Verizon manager who provides technical support within the company and to its customers, is a member of the St. James-based Consumers Fuel Group, which has an annual membership fee of $25 per home and offers a free heating system service contract, with a charge applied for more than one heating zone. It claims about 13,000 members, mostly on Long Island and some in Queens and Brooklyn. She said she had what she understood to be a ceiling on the price for her home heating oil purchases, arranged by the for-profit buyers group. So, Garofalo said, she didn't expect the per-gallon cost to go above what she thought was her ceiling, $1.50. Then on Feb. 5, she got her latest delivery, at $1.83 a gallon. That's when she went through the ceiling. "I was in shock," Garofalo recalled. "My understanding of the cap is that that's the highest the price can go." Although her account has been in the name of her mother, who passed away in December, Garofalo said she had handled the family's dealings with the buyers group for years. She paid the bill for that delivery but protested first to the Plainview-based General Utilities, the dealer chosen for her by the buyers group. Still dissatisfied, she pressed her complaint with the buyers group. Garofalo handled her complaint on her own to her satisfaction. Vincent Cioci, the buyers group president, said Garofalo did not have the kind of plan that has a ceiling price and so the group had no obligation to adhere to one. General Utilities has not participated in ceiling-price plans but offered its own new customers introductory fixed-price plans before the current market became so volatile, said Robert Shea, director of sales for General Utilities. "We've honored all our contracts," he said. Shea said the extreme cold and the volatility in the marketplace has presented difficulties for retailers, too. The frigid weather has taxed homeowners' heating systems and increased service calls, he said. Deliveries have been made difficult by the snowstorms. The plan Garofalo did have through the buyers group, according to Cioci, was what the group's registration form calls a "maximum savings option," with a customer's price "linked directly to the wholesale price." Her plan, Cioci said, offers discounted prices without a cap. The group's promotional material talks of discounts of 10 to 30 cents a gallon. After Garofalo complained, the group switched her to another supplier, Bayview Heating Oil, based in West Babylon. By Cioci's account, his buyers group then made a mistake and gave her a deal intended as a limited promotion for new customers in Nassau and western Suffolk who sign up through March 31. Despite its mistake, Cioci said his group will stand by the deal with Garofalo. So he said, she does have a price ceiling - that cap of $1.299 a gallon through the end of May.
Web Site Fails to Keep Pace To check the state's findings on prices of home heating oil or gasoline, for that matter, go to a Web site - but don't count on it to keep you up to date. The state Energy Research and Development Authority posts the results of its weekly samplings of the marketplace at www.nyserda.org/prices.html. Its home heating oil price survey does not cover discount programs or cash-on-delivery purchases. And with the volatility of the energy market this winter, unfortunately, weekly surveys often can't keep pace with the surge in prices or the blow it's dealing to consumers' budgets. -Henry Gilgoff
Copyright © 2003, Newsday, Inc.