Fuel clubs offer members discounts on oil, propane
In 1999, Dan and Cate Barraford of Barnstead noticed their publishing customers were getting clobbered by increasingly high oil bills. Dan Barraford had an idea: If he could amass 100 to 150 businesses and homeowners, maybe the fuel dealers would give them a discount.
It worked – and it’s still working.
Cate Barraford, owner and president of Our Town Energy Alliance since her husband died in 2011, said her members using propane save about $1 a gallon. Oil savings are harder to gauge, but Barraford said members paid as little as $3.18 a gallon for oil last year when retail prices were at $3.70 a gallon.
Today, Our Town Energy Alliance has more than 10,000 customers in New Hampshire, including greater Concord, and beyond. The Fuel Club, based in Claremont, also counts nearly 10,000 members in state and out. There is a smaller group, LS Fuel Co-op, in Sunapee that has about 400 members.
LS Fuel Co-op estimates that between 1995 and 2008, its customers saved an average of .66 cents a gallon on oil. In 2008, the last year for which the club had numbers, members paid $2.49 a gallon for oil while the retail price was $3.35 a gallon, according to its website.
Not so surprisingly, they’ve all grown without having to advertise. Their members bring them more members.
“I email once a year to all my friends because I’d feel guilty for not telling them about the co-op,” wrote a Concord woman on Our Town’s website. A Loudon man who belongs to Our Town was even more enthusiastic.
“I continue to sing your praises to others,” he wrote. “It DOES appear to be too good to be true, but I will assure anyone who calls or emails me that IT IS TRUE!!!.”
Each club works similarly: By offering a few selected fuel suppliers a big pool of customers, each club is able to negotiate discounted and predictable prices for oil and propane. The members of Our Town Energy Alliance alone buy 15 million gallons of fuel a year.
“Obviously, a large group is going to get better prices,” said Jerry Pritchett, owner of The Fuel Club. “If I walk into a fuel company and I’m buying just for myself . . . I am going to get pay what retail customers pay.”
Pritchett started his club in 1997 after discovering that he and his mother were paying drastically different prices for oil even though both lived in Claremont and used the same dealer. He started with 114 members and approached a couple of fuel dealers. He and Barraford both said dealers now approach them.
Membership is open to anyone and costs between $25 and $35 a year for households, depending on the club. Businesses pay a higher rate. Communities and school districts have also joined the clubs, as have nonprofits.
The club owners negotiate prices with dealers for a year at a time.
Members can prebuy at a locked-in price or they can choose “rack pricing,” where they pay the wholesale cost of the fuel plus a fixed “additive” price. For example, members of The Fuel Club who have signed up for rack pricing with Irving pay 42 cents over what Irving paid for the oil under the current negotiated price. The wholesale or “rack” price will be different every time the supplier delivers fuel, but members know their additional cost will be capped at 42 cents a gallon.
Each fuel club works with only a few fuel dealers, and they choose dealers based on the prices they can negotiate. Our Town Energy Alliance works locally with Eastern Propane and Oil and Lavallee Oil. The Fuel Club works in this area with Eastern as well and with Irving Oil.
Calls to Irving and Eastern were not returned.
Club members pay the club their annual membership fee, but they contract directly with the fuel supplier at the price negotiated by the club. The Fuel Club posts its negotiated prices on its website. While its members using Irving for oil pay 42 cents a gallon over Irving’s wholesale prices, its members using Eastern pay 43 cents a gallon over Eastern’s wholesale prices.
Pritchett said members can choose which supplier they prefer, although sometimes only one supplier delivers to their town.
“We make sure we have a variety,” Pritchett said. “Whenever there is a good healthy competition, the public benefits in lower prices.”
(Annmarie Timmins can be reached at 369-3323,
firstname.lastname@example.org or on Twitter @annmarietimmins.)