“When two tribes go to war”: heating OIL is about to get very interesting

“When two tribes go to war”, according to Frankie Goes To Hollywood circa 1984, “one gets all and two can’t score”. The UK heating OIL industry doesn’t generally know it, but it is about to be “Frankied” and things are going to get very interesting. The song was of course making a very obvious social comment about the Cold War with the video depicting the two superpowers battling away – in suits, in a wrestling ring! Two superpowers.

I turn to those that police our planet to explain: a few days ago Barack Obama did what he very often does and stood before his people, the media (including Fox and CNN) and, therefore, pretty much everyone on the planet. Billed as a reform speech on intelligence, with as brazen a front as Obama could muster, it was more a defence of what others have called “dubious” tactics of the NSA. He saved his biggest smile for the moment when he said “privately” even those that considered themselves to be the greatest critics of the US acknowledged that, as the world’s only superpower, the US had a “duty” to play this role across the world and “collect all”. I nearly choked on my coco pops when I heard it, but setting aside what I see as the utterly preposterous nature of such warped arrogance, the point is this: one superpower.

When there are two superpowers there is war – of varying degrees taking very diverse forms – and when there is one superpower there is something very different: hegemony.

If you are involved around this industry, UK heating OIL not policing the world, in any way at all you would have had to have been in a deep sleep not to have noticed that the UK heating OIL industry has gone through huge change in the last decade. The result is quite simple: a superpower was born. One superpower. 

However, things are not just set to change, they already have. One game-changing event occurred over the last year, a second superpower entered the fray. Two superpowers! So that must mean war.

So who are the protagonists – the two tribes if you like? Well neither are particularly well known out of their sectors. The incumbent is DCC. Everyone knows they have been very busy for a decade. The new pretender is World Fuel Services. If you’ve not heard of them it doesn’t take a genius to work out that they may be involved in shifting a bit of OIL around planet earth.

How do they match up? They are both extremely impressive corporations. Hardly even a minor blip on either record with continuous growth and return on investment. I should add they are both massive corporations too. We all know the depth of the resources that DCC have: their total revenues are over $10bn and they are spread across five diverse sectors in thirteen countries, although energy makes up over half of their profits. However, World Fuel Services are purely in the energy sector, and they have revenues of nearly four times the amount – $39.8bn. Currently they stand well inside the top 100 of The Fortune 500 companies. In short that means they are a giant of corporate America. 

Who is best placed? Well what do you think? DCC have been there, done it, bought a t-shirt or three. World Fuel Services have made a pretty audacious start. Which would you back? I have absolutely zero doubt which one will win.

What does this mean for the industry? We can only begin to imagine what this means and what changes are about to occur. By 2020 the UK heating OIL industry will go through the most dramatic transformation any energy sector will ever go through in the UK. How do I know that? Because when two tribes go to war…well let’s just say that those t-shirts DCC bought are not going to be printed with the words: “Frankie says Relax!”

What does this mean for you? If you are a supplier it means this is no time to relax. But, it will mean a completely different thing depending on whether you are ready to buy, or sell, or simply consolidate. My advice would be to take a very long hard look at your business, consider what changes are going to occur in the industry and get ready. Doing nothing, waiting and watching, is not an option. 

No matter what your angle, If you want to discuss the content of this blog then I am ready and waiting: chris@community-buying.com