Fuel-buying co-op planned in Katahdin area

MILLINOCKET – An association representing retirees in the Katahdin area hopes to form a heating oil co-op to negotiate better prices.

Officials of the Katahdin Area Retirees Association want to model their new heating oil buying co-op on a similar one in Aroostook County, which typically saves its 1,100 members between 10 and 30 cents a gallon on heating fuel and 4 cents a gallon off the pump price for gasoline. The Aroostook co-op has been operating for 10 years.

John DiCentes, a member of the Millinocket-based association, said membership in the new heating oil co-op would not be limited to retirees, but would be open to anyone in the area who wants to join. “It’s for anyone who wants to save a dollar,” he said.

DiCentes took the idea to the Millinocket Town Council, which said it is a great idea, but something that should be organized by a private group and not the town.

Millinocket Town Manager Gene Conlogue said he supports the consumer-oriented venture. He said the Aroostook County co-op has been very successful. “It is helping hundreds of families a year. It really has been a great benefit to consumers.”

DiCentes said it seems like every time the nations in the Organization of the Petroleum Exporting Countries talk about raising prices, the very next day oil and gasoline prices skyrocket.

“It seems we are getting fleeced from one end of the state to the other,” he said. “Each town you drive through has a different price for gas and oil. Does it cost 40 cents to deliver a gallon of gas or oil from Portland to here? I don’t think so.”

DiCentes said it appears that everyone pays different prices for fuel. “If you are a businessman you get a break [with discount prices],” he said. “The schools get a break and government gets a break, but the average person gets no break. They pay through the nose.”

Echoing DiCentes’ comments, an official of the Aroostook County fuel-buying co-op said the group was started because there weren’t any deals out there for the average person.

The co-op official asked that he and the group not be identified. “We don’t want anyone to know we are even around; that way there is no danger of the big [oil companies] putting on a campaign to get rid of us,” he said.

The Aroostook co-op started with the group soliciting bids for a season’s worth of heating oil from all over the state. The low bidder was selected. In succeeding years, the co-op has simply negotiated with a handful of companies known for low prices. The process later was expanded to gasoline and Internet service.

The co-op official said the group does not advertise and the only way new members can join is by being referred by an existing member. Members must be creditworthy – something that is determined by the oil supplier through an application process.

Members have the option of locking in a price or paying market prices. If they lock in a price and it drops, they still can buy at the lower daily price as long as they pay cash or by check.

The group has cut a deal with a gasoline supplier, who has a chain of stations across the state, allowing members to save at the pumps when they travel.

Gene Guilford, president of the Maine Oil Dealers Association, said he is not against co-ops but pointed out that Mainers are already getting a great deal when it comes to home heating oil.

Pointing to a Department of Energy heating oil price survey through the end of March, Guilford said oil in Maine was 7 cents cheaper per gallon than the regional average for the six New England states.

He said the regional average for No. 2 heating oil was $1.175 a gallon compared with Maine’s $1.106 per gallon. Prices in other states were $1.215 per gallon in Connecticut; $1.253 in Vermont; $1.17 in Massachusetts; $1.148 in New Hampshire; $1.127 in Rhode Island.

“The average homeowner is not going to get the same deal as a school, but the same is true for anybody who buys anything in bulk, so nobody is getting hosed,” said Guilford.

He said the average homeowner who owns a 275-gallon tank uses about 800 gallons of fuel a year, which means the oil company makes at least three or four deliveries. He said a school typically has a 10,000-gallon tank requiring one big delivery.

Guilford said it was no different from people buying bulk supplies of food at Sam’s Club vs. buying small amounts at Hannaford Bros. stores. “It doesn’t mean Hannaford Brothers is hosing you,” he said.

Guilford said he had received about 200 calls this winter from people complaining about being “screwed” because they had entered into a contract to lock in their winter fuel price and then prices dropped. “To suggest that somebody was getting hosed because the market turned the other way [is incorrect]. No, they picked the wrong plan,” he said.

Guilford said oil companies often offer fixed plans to lock in prices through the winter, but they also offer ceiling plans where customers never pay more than a certain amount, but for each delivery the price will float according to the market.

He said it was important that consumers learn as much as they can in order to make informed choices. “Ultimately, at the end of the day, it is the consumers’ choice,” said Guilford.

Those interested in the Millinocket co-op should call 723-4054.