CBL Review of 2012 – OIL

Community Buying unLimited Review of 2012

As you would expect there have been many interesting highs and lows across the year. The suppliers themselves have many on-going issues that do not help them or their industry, and not just our members but all OIL buying consumers continue to have to try and make sense of a business that very often simply does not make sense. Let’s take the issue of “Backwardation” for example. A term that is applied to commodities that means, in very basic terms, that buying a commodity to store now is a really bad idea because by the time it will be needed the spot price will be lower leaving you with a loss. Which is fine if there is a plan B, but no plan B left the supply market short of heating OIL on the UK mainland just when the supply market was about to get busy. Had we actually had a winter anything like the three before last winter we would have had an unfolding scenario that would have made for an extraordinarily difficult time – far more difficult than those previous winters.  The levels of heating OIL in the UK remain too low and so the issue has not yet been averted – the very impressive fuel price expert James Spencer summed it up: “there is no hope, with the backwardated market as it is, you will not get high stocks of kerosene”. This is a massive on-going issue.

GB Oils continued to swallow up competitors and further distort the market to the point that any consumer would look at the sheer enormity of their operation compared to the rest of the market and think one thing – monopoly. Never was the distorting influence this one company has in more evidence by the price hikes they imposed as soon as the calendar turned to December, thus enabling many other suppliers to feel justified in deviating from the wholesale price by a very long way, but just not quite as far as GB Oils!

BoilerJuice opaquely continued to do what BoilerJuice opaquely does, in particular, allowing suppliers the comfort of hiding behind BoilerJuice’s front to offer the appalling service of bumping regular orders for far more profitable “emergency” orders: we captured pence per litre prices of high 80’s but no doubt there were many that were higher. The growing phenomenon of internet sites advertising suppliers they haven’t even been in touch with likewise continued.

December saw the return of the “have a go, pluck a figure and see what the punter is prepared to pay” game from too many sales people within the supply market and oh yes – our absolute favourite – we saw the reintroduction of the “OIL before Christmas delivery charge”! This time it was £150+vat, abhorrent I know, but remember it gets worse as some poor person waiting for their OIL would have been bumped off the full tanker to accommodate those prepared to pay the fee.

The Distributor Debate happened in October and the most insight could be gained by the Q&As, as it was clear many distributors were willing to express their extreme concern about what they perceive to be the lack of leadership within their industry and questionable direction of where exactly their industry is actually heading. What was very obvious was that the level of concern was not matched by a commitment to really discuss the matters that are critically important. It is not just the elephant in the room scenario, there seems to be an invisible herd! What is not clear is whether there is a lack of willingness to discuss them or that those that should be aware of the issues simply aren’t? The quote of the year occurred within those debates from Mark Askew – The Chief Executive of the Federation of Petroleum Suppliers when asked by Ian Macmillan what FPS was actually going to do to protect the industry:

“It is a long process, and the stuff we are starting to do to educate – part of that is to educate the end users – but more importantly a lot of that work has to be to educate other stakeholders, including government, who I have to say from my experience of the select committee are largely ignorant of everything – they are ignorant about everything to be fair they don’t just pick on us – it is going to be a long process, but it doesn’t mean we should back off from it, what it actually means is you can’t just sit there and say the FPS should be doing this, it is up to every distributor to say what can I do about this to promote the industry as a whole and not just always the parochial interest.”

However, as our annual awards show, there are many within and without the industry that have done an incredible job and to go with that there have been many extremely exciting developments. Community Buying Groups are leading the way in many areas where the supply market simply is not equipped to. Kate Clemmow won her award because she has had the foresight to pilot a Pay As You Go OIL buying system with homes in Cottsway Housing Association. This is going to have a massive impact on many thousands of OIL users in severe fuel poverty and is extremely good news for the supply market. How? Currently many thousands of heating OIL users are not buying heating OIL because they cannot afford the £300-400 plus for the minimum 500 litres. We will bring those orders back into the market: a development that nobody within the industry could have forecast. This has given CBL the opportunity to finally develop our Community OIL Fund. This is the facility from which the vulnerable will be able to draw so that they can pay for their OIL as they use it. Again this will alleviate a huge issue for suppliers as we take many payment “issues” away from them. We look forward to working with the supply market to develop this unique fund. Proving that everything is connected we could not have achieved this without harnessing the latest smart technology. Both the fuel poor and the rest of our membership now have the option to make life easier for themselves, never run out again and maximise savings by having their OIL ordered for them when price trends are down, by joining our latest development – the UK’s very first Rural Energy Smart Grid. Feedback such as “this is absolutely FANTASTIC!!” tells us that we have found a winning formula. The feedback from the suppliers will be worth reading when they realise that this facility will benefit them in a plethora of ways: massive reductions in delivery costs; an end to aborted deliveries; precise orders ensuring every litre on every truck is delivered; easing supply issues by ensuring panic buying from those that have more OIL than they could possibly need will never happen again; and we could go on!

Finally, the very first carbon offsetting programme to cover the delivery mileage of all our group buying orders has begun and over 2013 this will be developed for any OIL supplier to get involved with. Likewise our Rural Dual Fuel concept that we have opened up for local suppliers to offer to their clients – adding all the other fuels that rural residents use in particular electricity – further diversifying what a local supplier can offer to their loyal customers. Which leads me to say in 2013 we will look to work even more closely with local suppliers to develop our relationship and actually proactively do what is necessary to help make heating OIL the socially responsible, environmentally conscious, community enhancing business it should be – doing and not talking! Imagine for example, if by working together we could kick OIL Fuel Poverty into touch: truly the possibilities are quite remarkable.