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The main topic that weaved its way through the discussion was how technology has seemingly passed by the oil heat contracting trade and how the traditional role of the oil dealers has shifted.
New alternative fuels like biodiesel are getting a lot of attention from homeowners because of heavy marketing efforts, something that O’Brien said has bypassed the marketing efforts of traditional oil heat advocates.
“Even NORA [National Oilheat Research Alliance] is considering dropping oil from its name and changing it to liquid fuels,” he said. “Liquid fuel covers all of the bases.”
Tice said the popularity of alternative fuels has him thinking a lot about the “what ifs.”
“If I was in the position to do it, I would start a cottage business selling 30-40 percent biofuels,” he said. “Biofuels have really become popular in just the last few months.”
O’Brien said that oil equipment shipments have dropped 35 percent in the last year and he isn’t too surprised by some of the reasons. “You see a lot of high-tech equipment at shows like this [NAOHSM] but you just don’t see that same equipment in the field,” he said.
Tice sees a good deal of the high-tech equipment in his region of western New York, but it might be because it is marketed better. “In general, the traditional oil guys are poor marketers,” he added. “If you have a unique product and market it right, you can sell it. The problem is, there are tons of oil guys out there who only can sell price and not value.”
D’Agostino expanded on the pricing theme and noted, “It seems like you have to play cut throat to survive. Guys who are getting laid off from their jobs are becoming our unlicensed competition. The oil service guys have to stick together and keep these unlicensed guys out. There is too much price undercutting.”
THE DEATH OF THE HISTORIC MODELAll of the contractors agreed that the traditional model of the oil retailer/service provider is disappearing. The model of the full service oil company is breaking apart. Companies are either selling oil or servicing oil equipment, but not necessarily doing both.
“The historic model is broken,” said O’Brien. “That makes this a good time for the independent contractors.”
“It’s good for me that people are buying from delivery-only companies,” said Tice. “I can pick up some good service agreement customers who have left the larger oil delivery companies. This is the best time to be small guys like us.”
O’Brien noted that so many oil dealers are not user friendly to non-customers. “There are so many roadblocks that these dealers set up for non-customers to go around,” he said. “The customers simply want service.”
It isn’t just the larger full service oil companies that are making life interesting for the three contractors; it is the utility companies as well. “I’m frustrated because I can’t shut down a furnace if there is a dangerous situation, but the utility company can,” said D’Agostino.
Tice said that customers are frustrated by high oil prices and poor service, but they aren’t jumping out of windows yet.
“In my area people hate utilities,” he said. “They are resigned to the fact that everything is going to cost more. People are not happy, but they are not freaking out.”
Publication Date: 06/16/2008