Rarely has Mother Nature affected Westchester businesses as much as in the past six months, and these early days of winter are already following suit.
The only difference is, over the past month and a half it”™s been the unseasonably mild weather that”™s having a detrimental effect.
Demand for residential and commercial heating services has dropped off significantly compared to a year ago. That, combined with high oil prices due to political tension in the Middle East, has meant sharply dropping returns for many local heating companies.
At Robison Oil in Elmsford, Daniel Singer said that while customers have no complaints, the company ”“ and by extension, its employees ”“ is fighting to make up for the lost revenue.
“It”™s been bad. Our revenue that would be associated with the weather is down about 20 percent,” said Singer, who is co-president of Robison Oil along with his brother, David. “I guess that”™s a positive thing for consumers. The consumer is benefitting from a lower demand for the product, but Mother Nature isn”™t giving the impetus for that demand.”
Similarly, at Atlantic Westchester Inc., a commercial HVAC company based in Bedford Hills, service manager Kelly Kraus characterized the demand for heating services as “mild,” adding that demand was at its lowest levels in several years.
Both Singer and Kraus said that January is typically the busiest month of the year for each respective company”™s heating service.
Currently, Robison Oil is sending out 20 percent fewer oil delivery trucks on a daily basis than it would in a typical January.
That has meant a handful of layoffs and significantly less overtime work for drivers, which Singer said would otherwise account for a large portion of his employees”™ compensation.
At the same time, local providers are having to cope with fast-rising wholesale energy prices.
As of Jan. 9, the wholesale cost of heating oil was up to $3.161 per gallon compared to $2.609 per gallon a year ago, an increase of 21.2 percent, according to the U.S. Energy Information Administration.
The problem facing local providers is not a local supply shortage, Singer said, but the global nature of the commodities market that is being reflected in the higher costs.
“Right now, there are no interruptions in supply. There is ample supply of product coming in and the vast majority of the refined products that we consume in the United States come from North America,” Singer said, adding that Canada, Mexico and Venezuela are three of the top countries from which the U.S. imports oil.
“The problem is it”™s a global market so if there are interruptions coming from the Middle East … all (of a ) sudden there”™s a global arbitrage that goes on and it increases the price even though there would still be ample supply domestically,” he said.
In the absence of the usual demand, Singer said that Robison has sought to emphasize other areas of its business, including energy consulting and natural gas services.
“The fastest-growing part of our business is our home energy survey program,” which he said involves “an assessment of the home and basically a home energy audit” to help customers cut back on their overall consumption.
As one of the few energy service companies authorized to sell natural gas to individual consumers in the Con Edison service area, Singer said that Robison Oil has also used its natural gas sales to hedge against rising oil prices.
“We”™re actively growing our natural gas business. That business didn”™t exist for us 10 years ago,” he said, adding that about 20 percent of Robison”™s heating customers use natural gas to heat their homes.
