Choice of Oil Dealer

Dan_15

I have found that the old line about having so many choices of oil dealers as a selling point not to convert to gas, rings hollow in some markets. I have found numerous high end boiler installers who do not wish to be involved in the service market. I have also found that most boiler service companies do not wish to provide service unless you buy their oil. So how is a high-end boiler owner supposed to find competitive oil prices and get good service at the same time? There is not as much choice as you think--it seems to be one or the other these days. If I want to get service from a reputable service company who knows what to do with my boiler, then I have to also buy their expensive oil. One company actually told me they would not even entertain coming to my house on a fee-for-service basis unless I was also an oil customer. What gives?

JOHN_103

service

because most as you say high price companys are loyal too there oil custommers and thats where they send there techs.our techs stay busy all day doing test and tunes or service and upgrading equip

lchmb

sometimes

Sometime's a little higher cost pay's for itself in the long run. A good oil company may charge a little higher but they put the money back into their tech's in training and equipment...

JOHN_103

yes they do

Leo

"I have found numerous high end boiler installers who do not wish to be involved in the service market." Your words. If you had gas where would this leave you? I as primarily an oil guy use the choice example. I don't use it so much for price as I do service. First you get what you pay for or hopefully you do. Second your choice is if you are treated bad or given bad service you can leave. If you are tied into a large utility what choice do you have. Especially with few service companies.

Leo

Dan Goodridge

expensive oil

Dan writes
"If I want to get service from a reputable service company who knows what to do with my boiler, then I have to also buy their expensive oil."

Maybe that oil is not so expensive if you consider the service ( knowledge and expertise) that comes with it. Price should not be the determining factor -- it is the value received that is important.

Dan_15

If I understand the business correctly, I am basically paying a premium for the benefit of other customers. Service companies need an alternative revenue stream to supplement the high costs involved with training and maintaining a competent labor force, so they charge higher rates on oil delivery than the average discount oil company that does not do service. Because my new high-end equipment (for which I already paid a legitimate premium up front to design and install correctly) does not break down often, if at all, so I never really reap the benefits of paying the higher oil prices. I would rather pay higher prices up front on a fee-for-service basis to do annual tune ups and fix any issues on a piecemeal basis, than have to share the cost of fixing everyone else's constantly breaking equipment. It seems highly anti-competitive in my opinion. This is not social welfare we are talking about; its business; If I use less of the services than others, why shouldnt I be able to pay less than others? Service companies should not strongarm high end owners into buying expensive oil; I have already paid my premium up front for design and installation of the high end equipment.

Constantin

Bundling Services...

... is always a thorny issue. Some say that in an ideal world, you'd have companies that deliver oil, and companies that do servicing. That way, you have a more straightforward transaction and choose the companies that best serve you in each particular field of business.

However, many people like the convenience of only having to call one number to get their heating, cooling, and fuel needs met. So, there is a market for every business model. My personal preference is towards eliminating any conflict of interest and having a straight delivery contract with one company and a straight service contract with another.

As the home heating business is very, very cyclical, I imagine that is one prime reason that oil many companies have diversified into installing and servicing oil-fired equipment, gas-fired equipment, and HVAC. That evens out their income stream.

Dan_15

I dont disagree; I am steamed that the service companies are cherrypicking the economic advantages of two different industries and leaving the disadvantages behind. Hedging their bets if you will, and not passig any benefit on to the customer. Under your model of keeping apples with apples, I would reap the benefits of a competitive oil delivery market on the one hand, while on the other hand sucking up the disadvantages of owning high end equipment in a young market
where the demand of qualified service technicians for high end equipment outpaces the current supply. This is good wholesome market competition. But, under the bundled model that exists today, the service companies are making me pay a premium for high end equipment installation (which I will gladly do), while also making me pay for their expensive oil, which really goes to cover their costs of providing frequent service to low-end customers. Why should I pay for their service? Let them do it! I havre already paid high costs up front for my own equipment. I cannot de-couple the oil delivery because there are no high-end servicers willing to give me just service and no oil. Its anti-competitive.

PJO_5

My Take...

I probably have more choices than you here in SE Pa, but here's what I do at my house;

I stuck with a single oil company for years, and have switched recently due to a couple of circumstances...

I had a technician (that they recommended) do all the work on my boiler from the startup 7 years ago to this day, and he is still my guy.

I keep the two separate for the very reasons you state, but at a property I own elsewhere it's like what you describe:
I can't seem to easily find a separate service company and the service guy (w/oil dealer) is good so far...but I also have very limited choices for oil dealers as well. This is for an old boiler I'll soon replace (some day...) so the service is even more important. The current guy is familiar with the system, so that's a big plus right now.

Hope this helps...PJO

Marty_7

Dan,

You also have a new piece of equipment that will not burn as much fuel so you will not be using as much of the "expensive oil". Did you ask your oil company if they would install your high end boiler? Sometimes if you are willing to pay them for your installation they will give you a break on their fuel.

The oil business is like any other. The oil dealers need to make money to survive. It is not uncommon to have over 1,000 accounts as an oil company, some have many more than that. To individualize their plans by cusomer would be extremely cumbersome so they tend to only have few programs which little or nothing has to do with the condition of your system. Why not give the guy with the older less efficient system a break, he will use burn more oil- more oil less expensive.

What I am trying to say is that while I understand your point the way these programs are setup everyone is basically getting the same deal. You are either getting a break on service but burning more fuel or getting the savings on fuel but getting less service. It should be up to the individual on figuring out if their is a benefit to paying the extra for the high end equipment.

ed wallace

oil service

I am an oil service tech who does not work for an oil company you should be able to buy the oil at a good price and not buy a service agreement oil companies make money on oil not on service

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joel_19

yup

It's a problem but not for our customers we sell service and install equipment . I could care less where you get the oil .

Here's the deal dicounters can be just that because they don't have service departments sucking the money out the door . The majority of full service companies I know loose money on the service end of the buisness and make up for it with oil sales .

They can't come to your house and be profitable without doing something like doubling their service rate . Which would be a pain for them to do and difficult to explain to most people . I'm surprised you can't find an installation company that does service though ? If we didn't service them I doubt that we would be able to sell any.

Dan Goodridge

service

Our oil company only provides service to OUR customers. This is not an attempt to strongarm people or to stifle competition- it is a service that we provide to OUR customers. We feel the product we provide is not fuel but keeping people warm.

As to "expensive oil" , I believe that "DAN " posted earlier this year complaining that no oil companies were offering fixed price oil for the season. I emailed him and offered to help him out with a fixed price of $2.09 per gallon.
His response :
"What do you mean by pre-paid program? I used about 1500 gallons last season, are you suggesting I need to prepay that amount? "


Some people ya just can't please.

Dan_15

Yes, I had not heard of pre-buy programs at that time. In the past I have been used to buying oil on cap or fixed price contracts. This year a lot of oil dealers are just doing only pre-buys. I have no complaint with the expertise of my servicer, and I support the market forces for running a business. I just take issue with the fact that I cannot buy oil in one place, and service in another. Some of us do not want one-stop shopping. I think someone above hit on the point that it all evens out, and I think that is probably ultimately true. Saving in one area but adding cost in another. Nevertheless, I think that vertical distribution channels tend to be anticompetitive and I think that decoupling oil from service only helps competition.

Leo

Service

Dan,

Go back to the company that pushes high end equipment and ask who they recommend for service. If they install this equipment they should offer or at least offer who does do the service.

On a side note oil companies I am familier with (that's what I do) only service the oil customers because they only have enough help to service this many accounts.

Leo