Another black eye for the oil-heating industry

DanHolohan

https://patch.com/new-york/midhudsonvalley/heating-oil-company-accused-defrauding-customers

Snowmelt

also aj perry received a 100,000.00 fine last week

DanHolohan

Yes, Snowmelt. There's another thread going on about that one.

Harvey Ramer

Is this the classic "bite off more than you can chew" scenario, or is it willfully calculated dishonesty?

DanHolohan

Sometimes, the market price goes up more than the price the company agreed to charge as a ceiling price. Honorable companies still deliver the oil when that happens, and they also learn a lesson.

Rich_49

TUITION Dan , Tuition

DanHolohan

For sure, Rich. ;-)

Mad Dog_2

The key question is: were the driver/s in on it, too? Kinda hard to believe they werent. Mad Dog

STEVEusaPA

It's probably a combination of greed and stupidity.
For years oil companies have been bombarded with all the 'better ways' to buy, sell, and hedge heating oil-despite the many reasons. They get lured into thinking they are going to hit a home run and make tons of money. And every once in a while, they get lucky and do.
So they buy these products (contracts, wet barrels, puts/calls), hoping the price goes up, but they don't buy down-side protection (insurance)-well, because it's expensive.
And by the way, when you (or me) think we know exactly how the market is going to go (prices always rise right?), it's already too late.
Now the reputable companies, will do like Dan alluded to, and drop their contract price when the market drops and carry on. Or if they didn't cover (purchase) enough wet barrels when the market goes up, will hold true to the price. The crooks will just be crooks.
Don't forget also the customer's stance. Now in the above mentioned case, it's just fraud.
But think about when a customer signs a contract, and locks in for (made up numbers) $2.50/gallon. Then the market drops, and the price on the street (advertised) is $2.19/gallon. Some of those customers, if their oil company won't drop or re-negotiate, will just call one of the cash companies, and buy the oil cheaper.
And it's pretty tough to try to take them to court, and probably not worth it.
Now the dealer is selling less gallons, that they have to buy.
Another scenario is people on budgets. They pay dutifully.
The weather goes warm, or the market (price) has dropped. Now they are overpaid, and the non reputable companies don't set that money aside and they spend it.
Throw in a warm spell and it spirals pretty fast for them.
I've watch a number of companies in my area go down the tubes trying to hit it big.
I will always keep it simple. Buy the oil and market price, mark it up, sell it.
If no one used hedging products, the only people who would truly suffer are the people who run the hedging companies. The oil company and the consumer will be fine with the market fluctuations.
@Harvey Ramer I think they bit off more than they can chew, then tried the worse possible way to cover. Although there are a few companies around here, catering to poor neighborhoods in and around Philly who blatantly rip people off.

Although this hurts the industry, I'm glad when fraud is detected, and the responsible parties punished, and hopefully tossed out of business, and in jail.

The driver's probably were just told to deliver certain quantites, for whatever reason. Could have been told supplies at the refiner are low, just give everyone 20, 50, 100 gallons
I couldn't tell from the article if people were receiving, say 20 gallons of oil, and the ticket said they received a fill up. If so, then yes the drivers were in on it.
On the service side, it didn't state if the tech performed the work, then the office over billed the customer, but at this point it's moot-fraud all the way around.
It's so easy to do a great job, charge a good price, and let word of mouth spread. I still don't advertise, and (unfortunately if you ask my wife) I work everyday, and turn down work.
Just greed and laziness.

EBEBRATT-Ed

Better put them in jail,

paying fines and restitution mean nothing to these owners. They will just go back into business under another name, or with their brother in law or cousin or mother.

This is a case of putting a ticket in the meter and throwing the hose into the top of the truck and pumping 50 gallons back in the truck. Pump 50 gallons into the customers tank and hand them a ticket that says 100 gallons

Steamhead

And they wonder why people switch to gas..............

DanHolohan

@STEVEusaPA , that's an excellent analysis. Thanks.

Mad Dog_2

That's what I say ED. Mad dog

Mad Dog_2

Right on Steve. You have nailed you are one of the God guys. Mad Dog