YEAR IN REVIEW

• Great propane and early oil prebuy prices in 2009. Rack Plus just OK so far.

A mixed year so far. Our propane prices have been fantastic this year, as much as $1.00 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

• 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. 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 pre-buy 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 - Irving oil contracts mailed

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.

Our Town Energy Alliance - May-June 2009

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.

Eastern
Open for existing Eastern customers & members on Rack Plus. Note, do NOT have to renew with Eastern if dues currently paid. New members must call Eastern at 800-523-5237 ASAP to register.
Propane Closed for Season

Fieldings
Open for OIL - Rack Plus
Propane Closed for Season

Gorham
Open for OIL -Rack Plus
50,000 gallons left. First come, first served. See prices.

Irving
Open for Irving Customers
Closed - Contracts mailed June & Sept
Lavallee Oil
Open for oil-Rack Plus
Does not sell propaneWe 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 UpdateAt 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 CFTCOn 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 NewsShould 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.
Here is a link to the Climate bill:

http://energycommerce.house.gov/Press_111/20090518/hr2454_ans.pdf The section you want to see is Sec. 351 on page 701.
Also, here is a link to the press release about *Mr. Stupak’s bill, which Congresswoman Shea Porter will be cosponsoring: http://www.house.gov/apps/list/speech/mi01_stupak/morenews/20090515pump.html
Where are we now?

Irving was late in wanting to bid this year. Though we had been requesting bidding since mid-February, they felt it was too early and were finally ready to bid on May 14th. By that time, the market had heated up. The first bid was $2.29/gallon and we decided that given current oversupply conditions, it would be prudent to wait. Similarly, Eastern ran out of the $1.99 oil at about the same time. Prices have continued to climb for no discernable reason except stock market euphoria and hype by Goldman Sachs. When oil prices dropped by 3.5% in one day recently, Goldman Sachs, the same company that predicted $200 per barrel oil last year (and needed a tax payer bailout due to its subprime and commodity market losses), predicted $85/barrel oil later at the end of the day, enabling the market to almost completely recover its price losses. For some reason, investors listen to Goldman Sachs, even though they know Goldman Sachs is a huge player in the oil market and that when Goldman wins, a lot of small investors must lose.

See: Oil Price Spike Looks like 2008-WSJ and Energy execs worry oil rise just mood swing -Reuters
We are in "Watch & Wait" mode at this time and may consider "Rack Plus" again if the market does not return to fundamentals, i.e. pricing more in line with actual supply and demand. In the meantime, I would suggest writing or calling all your Congressional representatives and Senators about banning speculation in the energy markets on the basis of national interest and security.
We will keep you posted here on the News Page. For more overall perspective see "A Brief History of OTEA Energy Pricing"
Regards,
Dan