Five Things You Must Read Before Locking In To Lock in or Not to Lock in? Fixed Price FAQs How Fixed Price Contracts Really Work What is Downside Protection? Tale of Lester Greene
To most people, the acronym FDR stands for Franklin Delano Roosevelt, the 34th President of the United States, who worked brilliantly with British Prime Minister Winston Churchill in an effort to save democracy and win World War II. At Garthwaite Energy, FDR means something entirely different. To us FDR stands for the three most important things we want to do when we service our customers every day. It is really pretty simple: We want to be Fair, Decent and Reasonable with all of our customers, employees and business partners one hundred percent of the time. We understand that we DO NOT live in a perfect world. We understand that sometimes our customers pay two days late for an oil delivery and miss our prompt payment discount. We know that homeowner’s heating systems fail at the worst possible time, requiring an expensive repair, just when the real estate taxes are due or the day after the college tuition was paid. Our goal is to be responsive to our customer’s needs. This is the case especially for good clients that have been with us for a number of years, as a locally owned company we can often assist our clients when they call us for help. So if you lost your delivery slip and do not want to miss the discount, or your water heater is leaking and your monthly Social Security check won’t cover the cost, or you wish your budget payment was $15.00 lower every month next winter, feel free to call us, we want to help. At Garthwaite Energy, we are guided by our long term goals. We have never been interested in trying to get rich quick or take advantage of any short term situation. Maintaining a good customer base that appreciates the work we do is our top priority. Without our customers we have nothing. One last thing we teach our employees is that while we spend countless hours training them to do the best job they possibly can, if they are not sure what to do, just remember to treat the customer as you would want your mother to be treated, and everything will work out for the best!
By Tom Carey The year was 1982, my first in the oil business. I was working for Hess Oil at the time, supplying fuel oil to large industrial institutions in Connecticut. Among our larger customers were General Electric, Dow Chemical and Yale University. In the fall of ’82 I met a man named Lester Green. Lester was in his sixties and was very sharp. He was a wonderfully generous man who had talent, real estate and money. He owned a complex of apartment buildings in the northeast corner of the state. The seven or eight buildings had about thirty apartment units in each. They also had very large fuel storage tanks, which if filled in the summer, held enough oil to heat the buildings for the entire winter season. The previous winter was our first with Lester as a customer. He bought over one hundred thousand gallons of heating oil, which Hess delivered in August. Lester was very happy that year. He got lucky. He bought the oil right. Shortly after writing the six figure check, the price of oil went up. Lester was so impressed with our company that he bought Hess stock and wrote to Leon Hess (who owned the New York Jets at the time), telling him just how pleased he was with his company. “Your men are like my own boys.” Lester wrote. The next winter was a different story. Lester filled his tanks again prior to the cold winter months. An international recession caused crude oil prices to fall from $32.00 per barrel to $28.00 by Thanksgiving. The warmest December on record caused wholesale heating oil prices to fall thirty percent in season, which never happened before. Lester could have saved over $30,000.00 if he did not fill his tanks in August. Lester then called to complain. He insisted upon speaking with Mr. Hess. He called himself “the victim” and demanded “restitution” for his “losses”. According to Lester, we had “bamboozeled and schnookered” him. I’ll always remember what Lester said next: “This is a miserable situation!” That year, my first in the business, I got to see the financial and emotional damage gambling on oil prices can cause. I made it my business to educate my customers on just how risky fixed price purchasing can be, soon after my encounter with Lester Green. Sometimes you win, sometimes you lose, and some gamblers get wiped out. Lester did not get wiped out. He was just angry. I share Lester’s tale with you hoping that a better understanding of history will help you make better decisions.
Some of us remember the oil shortages of the 1970’s. We all have heard about them. I remember waiting in line as gasoline was rationed by stations in our hometown. What most people take for granted is the twenty- five year period of relatively inexpensive oil prices that followed the Iranian Revolution and the Arab Oil Embargo. When I was growing up, my father heated his home with oil. In 1980 he made the switch to Natural Gas. He was motivated primarily by the projected savings the natural gas utility claimed he would enjoy. He fired his local oil dealer. He invested what amounted to about two months pay, dug up his lawn, installed new heating equipment and incurred unexpected expenses that the utility failed to prepare him for. I began working in the oil business in 1982. Every year my dad would ask me (because the gas company’s bills are difficult to read) to figure out for him if he was actually saving money with natural gas. He was very disappointed when he learned that within a year or two of making the switch, home heating oil was, on a BTU equivalent basis, cheaper than natural gas. Heating a home with oil continued to be cheaper than gas for fifteen of the next seventeen years that he lived. A few years ago, when oil prices rose to levels never seen before, as they did in the days of Jimmy Carter, natural gas utilities once again dusted off their marketing programs in an effort to attract consumers who were “stuck with expensive oil.” We all know what happened next: Oil prices fell as markets corrected causing those who spent ten to twenty thousand dollars to switch from oil to natural gas to feel like fools and suckers. Some things do not change. My dad had a friend in our neighborhood who was a landlord. He was very smart. We will call him “Billy”. Billy wisely bought a lot of property in the sixties, seventies and eighties. My dad told me how Billy borrowed money off his life insurance policy at 2% and reinvested it in a secure money market account at 18% (you could do that back then). Billy was, “Shrewd. He knows what is going on…always did”, my dad would say. When I was in high school Billy bought the most prominent commercial building in our town. Almost twenty years ago, when Billy learned that I owned Jamie Oil, he asked me about putting the commercial property on automatic delivery. He negotiated hard, he knew all about BTUs, therms and kilowatt hours. He knew the value of each. Then about twelve years later, when natural gas was once again cheaper than oil for a few months, Billy told me “Switching to gas simply does not pay, you just can’t amortize or recover the expense, especially when you add in the hidden costs. It rarely pays to panic.” My dad was right. Billy knew what was going on and he still does. We delivered oil to his building last week.
