Something wrong with the price of OIL again: it’s too low, unless Anglian Farmers buy it for you of course

This week we bought a quarter of a million litres of heating OIL on behalf of our members at prices lower than at any time during 2013. Yes the market is extremely depressed – it is so mild after all – and the wholesale price is very low. However, it is really about how extraordinary the suppliers are that we work with and the lengths to which they are going to work with us. Of course OIL prices are not too low, they are just extraordinarily low, particularly given that we are in the midst of winter. Unless, as I said, Anglian Farmers buy it for you.

Imagine my surprise when I saw this proudly displayed on the website of a rural charity based in East Anglia whose “early January” order was placed on 9th January:

  • Highest price quoted by a supplier: 65.67 pence per litre
  • Average price quoted by suppliers: 60.82 pence per litre
  • Member price (kerosene): 55.42 pence per litre

why am I surprised by this, the member price is in the mid-50s all sounds good, right? Well actually all is not good. We check thousands of prices right across the UK to ensure our stats are the most accurate there are – our integrity is critical to us. On that very day we collected a quote in that area for 54.7ppl from Boilerjuice. If you know anything about CBL member prices then you know we generally annihilate Boilerjuice prices by 2ppl – and sometimes 5 or 6ppl.

There is something very wrong with this price: simple fact is CBL placed orders at that time in the 52s and 53s. We placed very few in the 54s. Absolutely nothing in the 55s. Therefore, there is something very wrong with that price above. CBL didn’t buy in that area on that day, so of course I don’t know what we would have bought at, I just know our price would have been a lot less than these unfortunate OIL buyers have received.

But how is this possible? This organisation have the following message on their website:

“Our scheme began as part of a national initiative started by our colleagues in Oxfordshire. By June 2013 we had grown to a size where purchasing can be undertaken locally for our members on our behalf by AF Affinity, a subsidiary of the Anglia Farmers co-operative, and we expect to see significant price improvements with bulk purchases each time, because we are part of bigger scheme, we should be able to get better prices for everyone.”

Looks like that didn’t work out so well does it?

But how can AF Affinity be so bad at buying community OIL? Well maybe this passage from their information will give us an insight as they talk about the “unparalleled buying power” of their parent company Anglia Farmers (AF) which is:

“a dedicated purchasing organisation with a negotiating turnover in excess of £200 million. (VAT of 5% must be added to all prices shown) AF Affinity Limited is a wholly owned subsidiary of Anglia Farmers Limited, the leading agricultural purchasing co-operative in the United Kingdom with a turnover well in excess of £250 million, employing over 100 staff.”

One hundred staff! It would seem that the need to pay the 100 staff, rather than the “unparalleled buying power”, may have become the dominant factor that drove this final price. Do you have a better explanation?

But who loses out? Well sadly the hundreds of members that belong to this OIL buying group. They joined a group that began with the vision of creating safer, more sustainable communities, helping those in fuel poverty to make the step up, engendering the spirit of community, supporting a rural charity to extend their vital services and reducing the miles, fuel and emissions of their energy deliveries, at the same time as generating fair prices for heating OIL helping those buying smaller amounts, in particular, to access significant savings. What they now think they are a member of I can’t begin to fathom.

Ludwig Wittgenstein once wrote: “If people never did silly things, nothing intelligent would ever get done”. It is pretty clear someone did a very silly thing, the intelligent next thing is completely obvious…you know where we are…your members certainly deserve better.

chris@community-buying.com