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Dear
Customer,
Well we've made it through another winter. You
have seen the price you pay for a comfortable home rise considerably this
season. Some of you have taken that in stride, however most of us need to be
more concerned about the cost of that comfort. Along these lines, I would like
to speak to some issues you may have.
Research surveys tell us that many of you believe
we make more money as a result of higher prices. Others believe we wait to make
deliveries when prices are highest. Some others of you may be actively looking
to mitigate that cost by finding another fuel source. Needless to say, price
spikes cause much speculation and consternation.
Let us make one thing very clear. We do not make
more during spikes and we do not wait for higher prices to make deliveries.
Those who make the most money are those who are smart or lucky enough to have
supplies secured before prices rise. However, the same would have lost money had
the price dropped.
We generally run a scheduled route system for
"will call" customers and computer generated routes for those many of
you who are on "keep full" status. Our computerized degree-day system
generates delivery tickets based on prior deliveries and area temperatures. So
we deliver based on need.
All consumer energy (electricity, heating oil,
propane, natural gas and gasoline) prices are set on the open commodities
market. The biggest influence, by far, is the price of crude oil. The buyers of
crude and gas liquids are affected by everything from weather to anything that
may interrupt the crude supply. Several of the main reasons for this winters
price spike was an unusually cold winter(15% to 35% colder than the last several
years) an oil strike in Venezuela and on going issues in the middle east.
The difference in our (Central's) purchase cost
and our selling price is our margin; but that is not our profit. From that
margin; we pay wages, insurance, truck maintenance, general overhead and the
wholesale price of the particular product concerned.
Based on the US Department of Energy sources, the
cost of 1 million BTU's of electricity is 190%($23.55) higher than
propane($12.39). Heating oil is steady performer, from the same USDE source,
after adjusting for inflation,and is the same price as in the 1950's. The same
cannot be said of milk, apples, chicken or white bread.
More than a few things to think about but all
valid. Depending on your particular wants and needs we at Central Oil are always
prepared to serve you in any way we can. We work hard to have a ready supply of
product at fair prices and want to serve you. We encourage you to get on a
"keep full" status and choose a budget option to help stabilize your
monthly cost.
As usual there is more information available at
the US Department of Energy website and you can call us about your energy
concerns, budget plans, products and services.
We look forward to serving you.
Sincerely,
Don Thacker
President, Central Oil of Virginia
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