Fighting Oil Skimming
November 24, 2008
For many years, oil heat contractors have heard the tales of woe from their customers: Someone is “skimming” heating oil from their tanks. Other words for skimming include “shortages” and “discrepancies.” Some of this skimming has come from oil company employees or common crooks, looking to make a quick buck.
For the most part, major oil companies try to police their own drivers with GPS systems and even private detectives. However, smaller companies and subcontracted delivery companies are often less vigilant of their drivers. “They can also be intentionally lax or even collusive,” said Warren Zaretsky, vice-president of marketing for the US Energy Group, Fresh Meadows, N.Y. “And not only that, the oil industry is perceived as the fox watching the chickens.”
Zaretsky added the root cause for the thefts are that there is no automatic, accurate verification or double-check on the buyer’s side of the transaction and so the “unscrupulous have a license to short customers,” he said.
He noted an example from July 2007, when executives at two New York companies were arrested by the FBI for stealing $75 million in heating oil.
Paul Grabowski is a boiler mechanic from the Bronx who manages boiler operations for 141 buildings for three different building owners. He said that shortages have a trickle down effect between oil providers, service/delivery contractors, and building owners.
“We caught a major oil company short-delivering and came to an agreement that they would stop the theft,” Grabowski said. “We had to have them continue to deliver. They were providing the owner of the building credit through the winter. If an oil company is extending credit, you have to be careful. It’s hard in the winter because often the rent doesn’t cover the costs to heat the building and you need credit.”
THE VERIFIERZaretsky said the oil heat standard has relied on a measuring device that can have a “plus or minus 10 percent accuracy reading,” which gives oil delivery drivers some “wiggle room” and protection against being caught skimming.
He added, “A very few property owners or managers will expect their superintendents to climb on top of a cold and dirty oil tank to manually stick the tank with a wooden ruler, immediately before and after a delivery, especially when that delivery is often made at 4 or 5 in the morning. In short, the majority of building owners and managers know they have been victimized for decades, but have not had a means to prove it. It was not until the price of oil skyrocketed that it has become a substantive concern and that the cost of preventative technology is acceptable.”
The US Energy Group developed the Verifier digital fuel gauge, an advanced ultrasonic measurement system, which enables apartment and commercial building owners and managers to verify the amount of oil they receive, as well as control their inventory and budget. Zaretsky said that hundreds of gauges have been sold and installed in the New York metropolitan area since its introduction in 2006.
Ben Schwartz, president of Metropolitan Property Services in Briarwood, Queens, N.Y., which manages 50 buildings, said, “I had a number of buildings that I believed were being shorted. After installing the Verifiers and analyzing several weeks of deliveries, the results proved that we were shorted several thousand dollars and that the shorts were traced to a particular delivery company and one particular truck driver. Once we brought it to their attention, it stopped happening.
“Since I put the Verifier in, I have not had any issues with short deliveries. I consider it an alarm system. Drivers are aware it is there, and they are more careful with the deliveries.”
Grabowski has also been pleased with the results after installing Verifiers. “Oil consumption has dropped over 10 percent, despite the degree days being constant,” he said. “Theft has been stopped directly as a result of the Verifier. For example, for one owner, I installed six Verifiers and they immediately picked up a 10 percent short through all of those buildings. We had a meeting with the oil company and the deliveries were accurate after that.”
Publication date: 11/24/2008