GG&G's 2008 Annual Oilheat Survey
Gray, Gray & Gray, LLP Certified Public Accountants, Westwood, MA, has released the results of the firm’s 17th annual Oilheat Industry Survey. Responses to the survey were obtained from retail fuel oil dealers from throughout the Northeast and Mid-Atlantic regions of the U.S.
“The heating season was a reality check for many dealers,” says Paul Gerry, CPA, the Gray, Gray & Gray partner who manages the firm’s Energy Practice Group. “The unprecedented rise in oil costs had a profound impact on the industry, and that is being seen both in operations and on the management side.”
Gerry notes that two key indicators of industry confidence showed mixed results. “More than twice as many dealers reported they were considered selling their business (22 percent vs. 10 percent in 2007). But at the same time, more dealers were in the market to acquire another dealer (26 percent vs. 24 percent in 2007),” Gerry said.
Dealers seemed to have quickly learned a lesson regarding price protection programs for customers, after many were caught last season “upside down” when mid-winter oil prices unexpectedly dropped. Only 58 percent are offering a price cap program this season (down from 69 percent last year), and only 37% told Gray, Gray & Gray they would offer a fixed price program (down from 63 percent last year).
“Margins remained fairly steady last year, at $0.52 per gallon,” reports Paul Gerry. “But we believe that will be insufficient in the coming year, when high oil prices will push retail prices higher than ever before.” Gerry says the “per gallon” measure of margin represents a shrinking percentage of overall sales. “Fifty-two cents is only a little more than 10 percent of the projected retail price. The margin should be closer to 30 percent in order for a business to survive.”
Complete survey results are available on Gray, Gray & Gray's web site at: www.gggcpas.com, or by calling (781) 407-0300.
Gray, Gray & Gray, LLP is the country's leading oilheat and petroleum industry accounting firm. Gray, Gray & Gray's offices are located at 34 Southwest Park, Westwood, MA, and 276 Union Avenue in Framingham, MA.