RENEWAL TIME FOR 2010-2011
Prices have jumped since December 18th.
Although there is still a huge oversupply of oil and low demand by the developed
countries, such that
refiners are closing refineries, speculators are betting on increased demand by
the developing countries and recovery in the US "down the road". In the words of one analyst, speculators are betting
that "every Chinese worker is about to trade in his Schwinn bicycle for a
Cadillac Escalade" and that the day after tomorrow, most US workers will be
back on the job.
Oil futures for 2011 are in the $2.36 range (NYNEX cost
only), not including freight, differential and dealer margin). These
prices are very high compared to current supply on hand. So we are
back to mixed feelings about the market. If prices seem reasonable for
next year we would want to buy early in February as we did last year ($1.98,
$1.99, $2.11 early Fixed Price programs except for Irving who declined to
pre-buy in February).
As always, your best option is to sign up
before the end of January. That way if prices break and we do a Fixed Price
option, you are on board. Dealers will only accept paid up members for the fixed
price option, whether pre-buy, budget or Net 30. Note: Irving has tentatively
agreed to go along with and early Fixed Price program if other dealers do so.
However, if Irving does not provide an early Fixed Price program (assuming that
we feel conditions warrant it), we will break tradition and allow members to use
other dealers if other dealers are offering such a program.
We finally finished the Auto Renewal program,
by the way, If you click on that option, it will automatically sign you up and
charge your credit card every January until you cancel it.
We will be evaluating the market every day
from this point forward. for those of you who like to follow the details, here
are some articles pro and con on oil price predictions. Click to read:
OIL PRICES WILL BE LOWER
OIL PRICES WILL BE HIGHER
NO CHANGE IN PRICE
And an interesting article regarding the elephant in the closet:
- Great propane and early oil
pre-buy prices in 2009. Rack Plus prices just OK so far.
A mixed year so far. Our propane prices have been fantastic this year,
as much as $1.25 per gallon less than market price. We carried out early
pre-buys
with all our dealers except Irving who declined to participate in
February. Those prices were excellent. When prices increased, we
instituted Rack Plus pricing for new members and those who joined too
late for the early
pre-buys.
Rack Plus pricing was predicated on an El
Nino year
(warmer than average temps), highest supply of oil on hand in 26 years
and low worldwide demand. The speculators have managed to keep the price
up nevertheless. However, prices have dropped in the last few weeks (as
of 12/18/09)
- Rack Plus price
dropping-oversupply of oil and low demand
A sign of Happier Holidays is the recent price drop on oil; our rack
plus price today is between $2.30 and $2.39 a gallon depending on your
geographical location and dealer. Current market prices are between
$2.49 and $2.59 a gallon (as of 12/18/09). Still not as good as the early
pre-buys
of $1.98/$1.99 and $2.11 but heading in the right direction. The oil glut
is still with us and demand is weak. Oil prices, though fluctuating,
have been more stable than last year but are not yet dropping to where
we would like to see them
- El
Nino
effects minimal in New England
The predicted El
Nino is in full swing for the next three months but the current
warming forecast now currently excludes New England except for the warm
November we've recently experienced. See:
NOAA
Forecast
- We expect substantial Fuel
Price increases in 2010-2011 - Higher demand worldwide
China, India and Brazil on on their way to full recovery. The US and
Europe will swing to positive GDP growth in 2010. Oil demand will
increase and we expect higher prices.
- We plan on early fuel programs
in February. You MUST be renewed to participate. Join EARLY for the best
rates
Irving has agreed to an early
pre-buy
with our other dealers if conditions warrant, meaning all dealers will
do a pre-buy.
We think this will be the best pricing of the year. All dealers will
have budget and regular
pre-buy
(cash up front) programs; some will have tight contracts and
Net 10 or Net 30 payment terms. All dealers except Irving will probably
do a second and possibly third bid up to late Spring. I expect each
successive bid to be more expensive. Irving may or may not do a second
bid.
- Speculators - I don't expect
much relief from speculators soon.
Regulations to minimize speculation in oil are buried in the climate
control and
financial regulation bills. It appears that the Commodities Board
itself
is waiting to see what Congress does before they impose their own rules
such as requiring more money down to control future contracts.
- The 2 Gig Wind Turbine. We are
stalled on this project.
There appears to be no legal and inexpensive way to do what the Dutch do;
allow a couple of thousand small investors to put up a wind turbine. To open
the project to more than 35 investors, one would have to file with the SEC,
an expensive proposition. We intend to pursue it, however but probably with
fewer investors. We have talked to several members with very promising
sites.
- Wood Pellets - We did offer
wood pellets for sale this year in response to member demand at
$249/ton.
Food for thought. At the following prices, the following fuels provide
equal amounts of heat in BTUs; oil @$2.38/gallon = Pellets @$279/ton
and = propane @$1.58/gallon AND; when oil @$2.13/gallon =Pellets @$249/ton
and = propane @$1.42/gallon
Halloween
It's the 29th and a beautiful NH Fall day. But so far,
October has been pretty scary for our Rack Plus program. Our prices have been
not much less than market price, and occasionally higher than market price for
the last two weeks of this month. The reason is that Rack Plus is tough when
prices are rising While others are posting last weeks (lower) price), we're
posting today's latest and greatest (and higher) price.
It works MUCH better on the way down. We're still waiting for that speculator
bubble to break. It broke about this time last year and we hope it breaks soon.
If and when that happens we'll save lots of money.
Meanwhile those of you who took advantage of our early prebuys with all dealers
except Irving who didn't want to do an early prebuy this year, are enjoying
$1.98, $1.99 and $2.11 a gallon, though you had to put the money upfront. Oddly
enough, we couldn't get people to take the pre-buys until prices rose and it it
was too late to purchase more. We think that the depressed economy discouraged
many from making large upfront investments.
We WILL be doing early pre-buys again next February. We think that Irving will
also participate in an early pre-buy this time around and will let you know when
that has been agreed upon.
On a different note, we have converted space in our barn to offices and will be
moving in the weekend of November 7th. In all likelihood we will be closed for a
day or so. However, we'll have a lot more space and by November 20th a new phone
system to replace our antique one with twice as many lines. This should make it
much easier for members to contact us.
October 9, 2009 Update
The Irving oil contracts finally went out yesterday night, Oct. 8th. We
apologize for the delay. Negotiations with Irving took much longer than
expected. And though we gave the list to Irving on September 14th, it takes a
while for Irving to check the list and accomplish the direct mailing.
The letter included from Our Town Energy Alliance does include an error. In our
literature, we have defined the heating season covered this year as Oct. 1 2009
through May 31, 2010. Inadvertently, the dates included in the letter are last
years dates. Please ignore them.
If you have a delivery between October 1st and when we receive your contract,
you will be credited back the rack plus price once we forward the contract to
Irving.
Wood Pellets are
here!! Click
here
Save 10% - 15% on your heating bill. Intellicons
are available again for a short time.
September 2009 Update
We have decided to go with Rack Plus for oil for the reasons
below in September update. Accordingly, several dealers are
reopening for membership for oil. See below. To check which dealers serve
you, go
here.
| Dealer |
Oil |
Propane |
| Eastern |
Closed for Season |
Closed for Season |
| Fieldings |
Open for OIL - Rack Plus |
Closed |
| Gorham |
Open for OIL -Rack Plus |
50,000 gallons left. First come, first served.
See
prices. |
| Irving |
Closed for Season |
Closed - Contracts mailed June &
Sept |
| Lavallee Oil |
Open for oil-Rack Plus |
Does not sell propane |
We will be notifying members shortly by email and
mail. To join, sign up
here and then call 603-776-2500 to
pay for your membership.
September Update
At this time we are going with the "rack plus" variable discount (same as last
year).
We were on the fence whether to go with a pre-buy or do rack plus again. On
the one hand speculators are driving up prices while supply is building at
the rate of 1,000,000 gallons a day (See "
Verleger
Sees $20 Oil This Year on ‘Devastating’ Glut " ) .
Also the fact that NOAA (National Oceanic and Atmosphere
Administration ) as of July 9th predicted an
El Niño . El Niño causes mild winters in the Northeast. In 2002 and 2006
we had El Niños resulting in a substantial drop in demand and drop in
price of oil during the winter.
Finally, the new head of the Commodities Board, Gary Gensler, has indicated
he intends to rein in some of the gross
behavior, specifically by considering position limits and whether non user
hedge funds should be allowed to use the CFTC to hedge.
See CFTC
On the other hand, seven of the ten indicators in the Index of Leading
Indicators, signal that the economy has bottomed out and is headed towards
recovery. See
Bloomberg News
Should the market change significantly (prices fall) we will try to secure
a lock in price.
May-June 2009 Update
It's been a strange year. We predicted early that pre-buy would be a good
idea. Except for Irving who chose not to buy early, our other dealers gave
us prices ranging from $1.98/gallon to $2.11/gallon beginning in February.
The inexplicable thing is that we had very little interest in fuel at those
prices until recently. We ran out of oil with Eastern about a month ago
but still have oil with Fielding's and Gorham at those prices as of
May 31, 2009. We think that people were wrestling with the idea of giving up
"Rack Plus".
As we suspected the speculators jumped in to the market again about the time
Eastern ran out on first bid. We've been waiting for prices to drop but
instead they have climbed steadily. There is absolutely no demand/supply
reason for this. We have the highest oil stockpiles in twenty years and
demand in the US and Europe is decreasing, not increasing. China is up 4%
in oil use last month but was flat the month before. I have been in touch
with Bob Moller, Energy Specialist in Congresswoman Carol Shea-Porter's
office regarding speculators. Shea-Porter sponsored a bill limiting
speculation last year (after she received 4000 emails/letters from our
members). Moller said Congressman Stupak* has introduced another bill to
ban speculators from the energy commodities market. It was attached to the
Climate bill which has a good chance of passing. Unfortunately, the
timetable for passage is October. Details of the bill are below, courtesy of
Mr. Moller.
