Once again, various weather forecasting bureaux are put forward contradicting long term forecasts for the coming winter period. However, whatever the weather may be, fuel-oil prices usually rise as the winter progresses. As demand for heating picks up, Gasoil and Kerosene prices go up as well. The Gasoil price increases also impacts not just heating users, but also organisations using Gasoil for Plant, Marine and Rail traction, Refrigeration motors, Generators, etc.

Cold winters inevitably result in higher fuel bills. For most enterprises, gas and electricity prices are at fixed agreements, with little flexibility. However heating oils tend to be procured on a spot price basis, with the user exposed to margin enhancement by suppliers as demand rises. Users are therefore faced with a potential cost double-whammy of increased volume and increased prices.

At Expense Reduction Analysts our experts have years of experience in negotiating heating oil prices. Fuel specialist Duncan Rogers says:

“We find that fuel pricing can be very difficult for clients to manage, and is apparently driven by smoke and mirrors tactics that suppliers use to confuse users. Any increase in demand can result in margin enhancement, and users have no measure as to whether best value is being obtained when placing orders.”

“Tactically, the best approach to this is to review the situation now in order to ensure that exposure to enhanced price increases is reduced, whilst enjoying the full benefits of any subsequent price reduction when prices fall in future.”

“Before Jack Frost’s icicles push up prices, now is the time to talk with us about a potential review of purchasing in this spend category”

Article by: Duncan Rogers