Fuel Oil News

Fuel Oil News May 2016

The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding

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18 MAY 2016 | FUEL OIL NEWS | www.fueloilnews.com TO VENTURE INTO PROPANE MARKETING with the mindset of a fuel oil mar- keter is a big mistake, advises Mike Taylor of Combined Energy Services, a company in Monticello, N.Y., that has marketed both fuels since the early 1970s. "Oil gallons are slowly diminishing over time," but fuel oil marketers should resist seeing propane as "the great pie in the sky," Taylor said. "The whole thing is, it's not the fuel oil business. It is entirely different. It has transportation, it has [fuel] and it has the same type of customer base, but it just has to be done in a totally different mindset." Taylor's father, Walter Taylor, got into the fuel oil business in 1968 by purchasing a one-truck operation. Over the next few years the senior Taylor purchased a propane cylinder delivery business, and then another small fuel oil company that also had a bulk propane truck, Mike Taylor said. A subsequent acquisition of Roy's Gas, a company in Bethel, N.Y., marked the beginning of a move into propane on a bigger scale. Roy's had been purchasing propane from a large northeast company, the younger Taylor said, "But my father soon realized that in order to really be in the business properly you had to have your own bulk storage facility." Walter Taylor built one in the late 1970s—and a few more over the decades as the business grew. "We have four branch offices currently, seven propane storage facilities and two fuel oil facilities," Mike Taylor said. The com- pany operates in the Catskills and lower Hudson Valley in New York State, in the Poconos in eastern Pennsylvania "and we're working on building our next location down in northern New Jersey now—another propane bulk plant and branch office," the PROPANE MINDSET BY STEPHEN BENNETT The propane business is more unlike than like the fuel oil business, said a veteran of a dual-fuel enterprise Taylor said. (Walter Taylor, now 79, remains the president of Combined Energy Services.) The company operates its own fleet of 15 propane trucks and five fuel oil trucks. "We haul all our own products," Taylor said, "so we have five propane tractor-trailers, and we have two oil and gasoline trailers on the road." Once the business reached "a certain size," Taylor said, "it made sense in our business model to have our own transportation. One of the main tips I would give anybody who's looking at being in the propane business [is that] you have to be loyal to your supplier, and be loyal to whoever's hauling your prod- uct for you. If there's an opportunity to save two cents a gallon you have to pass it up. You have to find reliable suppliers." Taylor pointed out that in the propane business "you purchase gallons in the sum- mer months and you allocate your gas in the winter. That's very, very important. Propane supply can dry up very quickly." He warns against looking for "the cheapest rack price today." Instead, he rec- ommends establishing "a good relationship with good suppliers that are dependable." Even then, Taylor said, "Nothing's a hun- dred percent. Supply infrastructure for the Northeast especially is very thin. It's improving drastically in the last few years with the advent of Marcellus shale gas. But there are problems." Propane for the Nor theast is ty pi- cally procured from what is known as the TEPPCO pipeline, operated by Enterprise Products Partners, a pipeline company head- quartered in Houston, Texas. The pipeline has terminals in New York State in Watkins Glen, Oneonta and Selkirk. Propane supply is also procured from refineries in New Jersey and Philadelphia; from rail terminals, which receive propane from Texas, western Canada, and elsewhere; and from port terminals in

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