Fuel oil dealers concerned about rising prices
Wednesday, 11/14/07 7:14am and 7:14am
Nina Keck - Rutland, VT
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(Keck) I'm Nina Keck in Rutland. The high price of oil is making fuel dealers nervous as well. Chris Keyser owns Owner Service Incorporated - a Proctor based company which provides propane, heating oil, gasoline and installation services in Rutland County.
(Keyser) "I am very worried about being able to supply people and not get buried with accounts receivable by people who can't pay their bill. . . . physically can't pay their bill. So we're just going into the season with our fingers crossed. It's going to be awful."
(Keck) And Keyser says it's not just the poor who are going to be affected.
(Keyser) "It's people who have to reorganize what they're going to spend their money on. And that takes a little while for people to reorder what they're going to do and I think we're probably going to be concerned about a quarter of our customer base."
(Keck) The way oil prices have fluctuated in recent years Keyser says dealers have to be much more adept at managing risk. Especially because of the limited amount of storage space to hold fuel.
(Keyser) "Our contracts from our suppliers across the board say that we will pick up a certain number of gallons at a certain price. But then we have to determine and match up what we buy from suppliers to what we then project that we're going to sell to our customers. So the real hurt - is when those don't match up."
(Keck) Like last year, he says, when a warmer than usual winter meant people used less heating oil.
(Keyser) "It didn't happen to us, but I know that some people - retail operations - were penalized by suppliers because they physically couldn't take the oil. Cuz it was so warm."
(Keck) More customers are buying their fuel in advance at a set price. But Chris Keyser says the majority of people still pay as they go which means fuel dealers don't always have all the capital they need up front to make purchases.
(Keyser) "So if the price goes up, that means that you have to rely on your bank to borrow the money so the dollars become much more significant and they can drive the profitability right out of your business."
(Keck) Higher prices also push customers to shop around which means dealers have to compete even more to stay in business. For VPR news, I'm Nina Keck in Rutland.
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