Heating oil companies merge while another enters the market
Sierra Energy and Allied Washoe merged last month, leaving portions of Plumas County with just one heating oil provider — but not for long.
Ed Staub & Sons announced last week that it would expand its delivery service in Plumas and Sierra counties beginning Thanksgiving week.
“We received a number of phone calls from people who wanted us to provide service here,” said Bo Mullen, area manager for Staub. “We saw this as a golden opportunity.”
Staub had been delivering heating oil to the Chester and Greenville areas, but not to Quincy or eastern portions of the county.
Now, the company will make a loop that will bring its trucks through Quincy, Graeagle, Portola and Sierra Valley.
Mullen said many of the customers who called were concerned about the cost of fuel oil. Staub was charging $3.99 or $4.09 for a gallon of delivered fuel oil, while Sierra Energy was charging $4.41 or $4.51 per gallon delivered.
Why the price difference?
“Our price is what it is,” said Dave Frenzel, local manager for Sierra Energy. “It’s all supply and demand.”
Mullen sees it differently.
Mullen said that his company, which is family-owned, has a set profit margin.
“We don’t want to gouge customers,” Mullen said. “The owners of the company don’t want to do that.”
The price of heating oil is based on the cost of crude oil, the refinery process, transportation, marketing and profit margins (see related story).
The following prices were quoted Oct. 30, 2012, for residential buyers. Some promotional discounts may be offered to new customers.
Allied Washoe, Reno
$4.65 per gallon delivered for route customers
$3.50 per gallon for customer pickup
$4.39 per gallon delivered; pickup not available
Staub Energy, Susanville
(delivers to Doyle, Herlong, Susanville, Chester and Greenville)
$3.99 per gallon delivered on monthly route
$4.09 per gallon delivered will-call
Sierra Energy, Roseville
(delivers to all of Sierra, Plumas and Lassen counties)
$4.41 per gallon delivered (more than 75 gallons)
$4.51 per gallon delivered (less than 75 gallons)
Last week, Sierra Energy’s prices were in line with some Reno suppliers, but higher than Staub (see adjacent box).
All were higher than government estimates. The U.S. Energy Information Administration estimates that the average cost per gallon of fuel oil this winter will be $3.80.
“I don’t like to talk price, I like to talk service,” Sierra Energy’s Frenzel said. He added that some “individuals do things to compensate for shortfalls,” but declined to elaborate.
Instead, Frenzel focused on his company’s commitment to service, which would be extended to their new Allied customer base.
“All of the service should be uninterrupted,” he said. “We purchased their people and their customer base,” Frenzel said, referring to Allied’s employees as well as their customers.
Frenzel said that Sierra Energy trucks would deliver heating oil to both Allied and Sierra Energy’s route customers. The company has added a new truck to accommodate the increased business and plans to add another mid-year.
Staub’s Mullen said his company also has the trucks necessary to accommodate expanded deliveries and will hire more employees if necessary.
It’s difficult to pin down the exact number of customers who rely on fuel oil in the county, but Dee Dee Driscoll, owner of Quincy Hot Spot, estimates it to be as high as 5,000. She said that in a five-year period, the Hot Spot sold 1,500 Franco Belge stoves, not counting the other models that they sold. There are also numerous Toyo and Monitor stoves sold by other distributors in the county, as well as furnaces that rely on fuel oil.
Richard Kerr, owner of AAA Maintenance, has serviced and repaired Toyo and Monitor stoves for the past 16 years. “There is at least one in every other house,” he said, adding that when he started servicing the stoves, heating oil cost 75 cents per gallon. “You could heat an entire home for $35 a month.”
Kerr said that having two heating oil providers is a good thing because it “encourages competition” and cited what happened to propane when Ferrell Gas entered the area. “Last year I was paying $4.60 a gallon for propane and this year I am paying $2.30.”
Even if those who use heating oil don’t experience the same cost reductions, Kerr said that there are many things that people can do to make their stoves run more efficiently. (See next week’s newspaper for Kerr’s tips on maximizing your stove’s heating capacity.)
When asked if Sierra Energy planned to do anything differently now that Staub would be distributing in Quincy and Eastern Plumas, Frenzel said, “No, it’s business as usual. Staub has been here numerous times. It’s no big deal to us.”
When Mullen was asked if his company is simply making a trial run in the area or plans to stay long-term, Mullen said, “We have a 100 percent commitment to be here.”
Wendy DeGroot, Staub’s sales and marketing manager, echoed that sentiment. “This is a long-term strategy,” she said, and added that company officials analyzed the market before making the decision.
The company expects to begin fuel deliveries to Quincy and Eastern Plumas during Thanksgiving week and will establish weekly routes.
DeGroot said that online credit applications are available at the company’s website, edstaub.com, or by calling 257-3416.
Ed Staub & Sons is currently headquartered in Tule Lake, but is moving its headquarters to Klamath Falls, Ore.
Sierra Energy is based in Roseville with a local office in Quincy. The company can be contacted at 866-316-7477.