By Paul Nazzaro, President, AFS
At a recent conference which I spoke, I headed a session for oil dealers on how to survive in today’s competitive and uncertain heating oil market. Happening directly across the hall, at the same time, was a session on how to value your business to prepare it for sale. Guess which session drew the bigger crowd? Sadly, it wasn’t close.
While I may have lost the popularity contest that day, it’s the dealers who were clamoring for a seat across the hall who’ve truly lost. Market contraction due to the influx of natural gas—which has done an admirable job positioning itself as a cheaper, cleaner, and more efficient alternative to oil heat—has convinced many dealers that it’s time to pack up shop and get out while they can. Meanwhile, those who’ve stayed the course have been rewarded with the most favorable market conditions the heating oil industry has seen in years. As I write this, the price of West Texas Intermediate sits at $47.69 a barrel, down more than 50 percent from the previous three-year average. Ask any building manager who runs a dual-fuel heating system which fuel they’re currently using; the answer may surprise you. For the first time in a long time, oil can compete with natural gas on its strongest selling point: price.
However there’s no denying that public pressure and consumer demand are both growing for a cleaner, less carbon intensive, and more efficient home heating fuel. Even longtime heating oil customers, though thrilled with what they’re paying, aren’t necessarily thrilled with what they’re burning. So my question to oil dealers now is: What are you doing today to ensure your customer’s business tomorrow? If oil bounces back to $100 a barrel next season, what’s to keep them from converting to natural gas?
The answer is Bioheat®. Manufactured to stringent ASTM D396 standards, Bioheat® provides a low carbon, clean burning, efficient liquid heating oil that can out-compete natural gas on environmental benefits at virtually no added cost. While B20 blends have been used by entrepreneurial dealers for many years with great success, the recent vote by ASTM to set formal performance specifications for B6-B20 blends in the D396 heating oil standard now provides the industry with a needed ingredient to move to B20 blends. Not only does a B20 blend in heating oil have a lower carbon score than natural gas (using even the most conservative estimates), it’s also renewable, domestically produced, and has been safely used in existing burners without modification for more than 10 years with dealers reporting fewer issues and less service calls. For the customer who year after year considers biting the bullet on an expensive natural gas system, this should come as welcome news.
The updated ASTM D396 Standard Specification for Fuel Oils, containing the new grade for blends of 6 to 20 percent biodiesel, will be finalized and published by ASTM for public use soon. So I guess the only question left is, what are you waiting for? There has never been a better time to share the Bioheat® story with your customers.
Paul Nazzaro Sr., President, Advanced Fuel Solutions, Inc. For more information, please call (978) 258-8360 or email Paulsr@yourfuelsolution.com.