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.
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:
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
