Shop Around For Best Deal On Oil Or Gas Heat

The Record ( — Sunday, November 1, 2009


There's not a whole lot you can do about Mother Nature; she blows hot and she blows cold as she pleases.

But you can do something about your heating bills by shopping for suppliers, whether you heat with oil or natural gas.

Oil heat customers have a choice from among the dozens of dealers serving the North Jersey market, dealers whose prices — and services — vary greatly.

There are full-service dealers who maintain your furnace, do emergency repairs and deliver fuel And discounters who do nothing but pump oil.

And there is the New Jersey Citizen Action Oil Group, which contracts with full-service dealers to supply fuel and service — usually at below-market prices.

It has about 4,000 customers (up from 1,500 five years ago) who pay a $30 membership fee ($15 for seniors over 60) to save an average of 25 percent on oil, says WendeNachman, the group's director.

The non-profit organization serves as an agent for its members, using its bulk purchasing power to negotiate the best possible price from local dealers, who provide the fuel and service.

Until recently, Citizen Action and many dealers offered prices that were capped at a maximum, protecting customers from big increases. But they don't any more due to the volatility in oil markets, Nachman said.

"A lot of our suppliers, especially in the northeast portion of the state, used to do price caps, but they can't afford them any more," she said. "They're a big gamble. Dealers lost big time and had to eat much of the cost."

Instead, members pay a set 40 cents a gallon above wholesale, Nachman said. By comparison, some oil heat dealers charge up to $1 above wholesale, at least in the heart of the heating season. But some offer low margins in September and October to attract customers.

Last week the difference was about 8 cents a gallon, with Citizen Action charging $2.62 in North Jersey, Nachman said. By comparison, the average was $2.70 in The Record's spot check of local dealers.

But prices for both are on an upswing; just two weeks ago, Citizen Action was charging in the $2.25 to $2.30 range while local dealers were at $2.46.

You may do just as well dealing directly with a local dealer, but you owe it to yourself to also check with Citizen Action.

Gas heat customers also can save by shopping around. Historically, you had no choice, as the gas came from Public Service Electric and Gas Co. or whichever utility served your town.

But that is no longer true, and companies such as SystrumEnergy in Fairview can supply your natural gas for 20 percent less.

Customer choice has been around for a decade, but it wasn't until the wholesale natural gas market plunged that it made financial sense for residential customers to go shopping.

In October, Systrum was quoting 65 cents per therm, plus tax. That is 18 cents lower than the 83 cents PSE&G customers pay.

A typical customer uses about 200 therms a month in winter.

The difference: Systrum buys gas on the spot market, where prices hit a seven-year low in September, said Alex Tullo, whose family owns the company.

"We just purchase it on the market monthly at a rate better than theirs," he said.

PSE&G, obligated to lock in adequate supplies for its 1.7 million gas customers, purchases gas year-round, so today's price reflects the ups and down of the commodity market.

What's appealing about the Systrum offer is that it comes with no contract, so you can opt out at any time without penalty. That is a critical point because if gas prices go up — as well they could — your rate will increase.

If you do get your gas from any third-party supplier, little will change beyond how much you pay. Systrum will supply the gas, but it will still be delivered by your current utility which will remain responsible for service and billing, Tullo said.

"We don't own the pipeline," he said. "If you smell gas, call PSE&G."

Also, don't forget basic conservation measures — caulking, storm windows, programmable thermostats — to reduce your bill.

Shop for heat

Three places to check to save on heating bills:

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