Western Pa. oil companies not happy about steep price increase kicking in

The price of natural gas isn’t the only thing that’s going up.

The cost of home heating oil is about 80% higher than it was a year ago, and that isn’t making local oil companies very happy.

Representatives of companies such as Glassmere Fuel in West Deer and Export Fuel in Export say high oil prices don’t benefit their businesses. That’s because they operate by buying fuel and delivering it. If they’re paying more for the fuel, and their customers are buying less because they can’t afford to pay a higher price, that’s a problem.

“The customers are buying less per delivery,” said Kristen Zawoyski, operations manager for Export Fuel. “Therefore, for us to yield the same amount of overall gallons delivered, we’re forced to stop the truck multiple times, which causes more wear and tear on our trucks and more labor-intensive work for our employees.

“The days of customers calling in and wanting their tanks filled are long gone. Most all of our customers are wanting the minimum delivery of 150 gallons. And this is all because the price is skyrocketing.”

The price of a gallon of delivered oil in a 150-­gallon delivery last November was $1.95 a gallon. In the nearly one year that has passed, the price has risen nearly a full dollar to $2.85 a gallon.

And Zawoyski said she doesn’t see the price coming down anytime soon.

“The way the economy is right now, it’s not helping the oil and gas industry from a pricing perspective, and I don’t see how that’s going to change in the near future,” she said.

Dave Talmage, operations manager of Glassmere Fuel in West Deer, said he wishes the price of oil were going down.

“I think it’s overpriced,” he said. “People always think when the price of oil goes up, it’s good for us, but it really isn’t. It actually costs us more money to operate, and it cuts into our profit margins because we want to keep the prices as low as possible for the customers.”

The price of oil was bound to go up because, as Talmage says, when the pandemic hit, and people were driving much less as a result, prices bottomed out.

“It’s a matter of supply and demand. If you have a lot of oil in reserve, you can keep the prices low. But as a result of things like Hurricane Ida (and the damage it caused), inventories are down and the demand is up. And that’s driving the price up.”

More than just demand?

But Talmage said there are less obvious factors behind the rise in oil prices.

“In my opinion, the price speculators are part of the cause of this,” he said. “They buy futures and then they sell them. And they say, ‘We think the prices are going to be higher, so we’re going to buy now’ — and that drives the price even higher. There’s nothing you or I can do about that.”

Zawoyski said when it comes to Export’s commercial accounts, the situation is even worse because companies are hitting their credit limits far more quickly because of the increased price per gallon.

“As a fuel company, we pay for the fuel within three to 10 days. Our commercial customers have between 15 and 45 days to pay for their fuel,” she said. “The amount of credit we’re carrying for people is increasing exponentially and so are our costs.

”It all goes back to increased oil prices, which we have no control over. We have no say in the matter — and we can’t bring down the cost.”