Every day, we all encounter things we love and things that need to change. The former gives us joy. The latter fuels our desire to make the world different—ideally, better than we found it.
However, trying to change deepseated beliefs and behaviors is daunting. We accept the status quo because effecting real change seems impossible. Still, we dare to ask: Can one individual make a difference? And, in our bravest moments: Could that one individual be me?
Throughout my career, I have been blessed to have encountered some of the most bull- headed progressive entrepreneurs and industry leaders you could ever imagine. When I say bull-headed, I’m being complimentary; they simply refused to follow but chose to lead. Often, they would question products and systems that were working just fine in the hopes of making them better. You may pass these people every day and not know who they are or what they stand for. They are the Steve Jobs, Elon Musks, Richard Bransons and the Ben Franklins, but we all know their stories, don’t we? What is yours?
Transitions & transitioning
When it comes to transitioning the heating oil industry from carbonrich to low-carbon, one could suggest it is risky business, or at the very least it goes against the grain, especially when some suggest aggressive change equates to creative destruction.
A decade ago, when I had casual conversations with many of my industry associates about moving away from carbon to a low-carbon fuel, I was blasted with sizzling criticism. No one would ever embrace a new fuel that would disrupt the norm and potentially add costs to the supply chain. Customers wouldn’t have even thought about asking for low-carbon fuel because they had no idea how it would help reduce their out-of-pocket homeheating expenses. So why change; why turn things upside-down; what’s the point?
The point is that the industry, and its core product heating oil, were long overdue for a change. Why? Because heating oil, as we know it, is no longer in-vogue with policy leaders where electrification is the new natural gas.
As entrepreneurs, we have a lot on our plates at any given time. Staying focused can be tough with a constant stream of employees, clients, emails and phone calls demanding our attention, not to mention the impact COVID-19 has had on us and what its continued effect moving forward might be. To say the least, times have certainly changed for us all.
Amid the noise and crisis management, understanding our limitations and working around them can improve our focus and increase our productivity. Our brains are finely attuned to distraction, so today’s digital environment, which brings all the noise into our homes and businesses every day, will likely not abate. Our ability to remain focused will be challenged from this day forward.
When markets closed on April 20 of this year, crude oil on the futures market sold for $37.63 per barrel. Sellers were literally paying buyers to take their oil. This chaos in the
oil market was largely due to the COVID-19 pandemic, which has caused plummeting oil demand.
For nearly a decade, it has felt as though no matter what low-carbon liquid fuel supporters have done to advance the transition of the heating oil industry from carbon-based to renewable, many just don’t seem to care enough to jump in and help push the industry over the top.
All the industry meetings, one-on-one encounters and conference events have placed the message in front of retailers and wholesalers alike; however, the message appears to have a short-lived impact.
For those of us who have long believed in biodiesel as the solution to keeping the heating oil industry alive and prosperous, it was our hope that by having all levels of the supply chain involved in the planning process, a larger number of individuals would at least feel some sense of commitment. However, most industry participants just go back to putting this very important transition on the back burner and continue to embrace the status quo.
The Equipment Service Sector
Some of the reasons for this malaise appear to be our aging population of disinterested parties who only wish to complete their final years in the business and not participate in the industry’s renaissance. Many choose to hold back because they suggest there is a lack of supply of biodiesel or that it is an operational nightmare, one they would not introduce into their customer base. However, one of the most insidious impediments to the industry fully embracing biodiesel is the equipment service sector. This problem necessitates everyone’s immediate attention.
Specifically, I’m speaking about the independent service companies that many dealers use to service their oil accounts in lieu of putting their own service team on the street. This sector, which I would like not to paint with a broad brush-stroke, needs a wake-up call and the only people they would likely listen to would be those who have shared an account list or who have these companies in their customers’ home at this very minute.
In previous articles, I have addressed the negative impact that flagrant misinformation by reckless service technicians and service companies not tied to full-service heating oil delivery companies have had on the industry. Here is an excerpt from a local fuel dealer who wrote to me about what he deals with daily:
Every day I receive calls from customers wanting to close their account with me because their burner service company has told them to stop using my oil because it is destroying their heating system due to the bio-content in it. One technician even went so far as to telling the customer her house was going to explode because of the Bioheat®.
When these calls come in, I talk to the customer and try to educate them on the benefits of Bioheat. However, they don’t want to hear what I have to say because they are convinced the oil is bad based on what the technician has told them.
I feel this situation is getting worse instead of better as time goes on. I’ve been blending biodiesel in my oil for four years now and feel as though industry leadership should reach out to these groups and help educate them on the merits of our new fuel.
While a core group of industry leaders—many of whom operate in the highest volume heating oil markets—have worked exhaustively to build market acceptance for Bioheat, sadly, many others have not. This article is not about those who have not chosen to lead. It’s about the importance of building collective accountability for the sustainability of this industry. I contrast responsibility to that of the current battle our nation is waging against Covid-19.
State and Federal leaders have been pleading with U.S. citizens to exercise social distancing. They have strongly encouraged us to follow the proven guidelines and facts that will help minimize the damage this virus is anticipated to cause if we continue avoiding their guidance. In many respects, our industry is no different. For far too long, our collective companies have failed to embrace proven facts about the overwhelming benefits of Bioheat and that has significantly stalled progress.
I’ll directly ask each and every one of you to pause and think about the future of your company. If you haven’t been an active supporter of Bioheat, please become an advocate and when you hear something or see something that is inaccurate about lab-tested, fieldtested renewable Bioheat, take action to correct the situation.
Don’t allow those not committed to this industry to badmouth Bioheat and continue to post misleading photographs of nozzles, strainers, filters and storage tanks. This equipment has been neglected or poorly maintained, but uneducated service technicians will blame every problem on the transition to biodiesel. This needs to be stopped and stopped today! These service-only companies are negatively impacting every reputable, dedicated retailer in our industry.
The main characteristic of a group with vision and deep accountability to enact radical change is that there is enough truth, respect and desire within the group to see each other succeed. With these principles as their foundation, the group can spur one another on toward achieving common goals. They understand that the success of one individual is not enough on its own to overcome failure.
Deciding to take ownership and to hold yourself and others in your industry accountable is an individual and risky choice, and it’s up to every individual in our industry to make that decision on their own and it must come from within. True ownership of a collective goal comes from a deep, intrinsic desire to give more effort than what’s required to succeed.
My commitment to advancing Bioheat for nearly two decades is well documented. When I received the email I’ve cited in this article, I did some research and discovered the website
for the service company that was spreading this virulent information. The website is deplorable, elementary and clearly designed to build their customer base by blaming all of you for delivering inferior oil, or worse, Bioheat blended fuel oil. I wrote to the service company and encouraged them to terminate this strategy, to contact me or an industry
leader where they operate and become informed about Bioheat and why our industry is advancing to Net Zero by 2050. As expected, they never responded. I guess they’re too busy poisoning customers with irresponsible counsel and scare tactics that increase their service revenue on the backs of local heating oil retailers.
So, what’s it going to take to motivate the heating oil industry to take a stand and fight back? What’s required to fight legislators anxious to put you out of business? How do we fight the underground communication that goes on each day that’s focused on sharing war stories about the deplorable environments these technicians find in customers’ basements? And finally, what’s it going to take to fight the non-committed delivery and service companies that take shrinking market share while never dreaming of supporting the State energy associations that are fighting battles each and every day to keep the markets open and available for all of us to compete well into the next several decades?
These characters can be as deadly as the Covid-19 virus. This article is not in anyway overstating the impact of this underground system that challenges your survival. Like the virus our country is fighting, no company— large, medium or small—will be exempt. It’s time to start practicing see something, say something. ICM
For more information, marketing tools, guidance or just to share an observation please contact Paul Nazzaro, 978-880-5338 or: [email protected].
Editors: In 1931, Aldous Huxley wrote A Brave New World, a critical and satirical look at a technological utopia. Today, environmentalists and liberals are proposing a utopian carbon-free world. However, for some, it will be a dystopia. This article lays out the path for our industry to stay on “the right side of history.”
Over the years, the industry has had a number of challenges, each of which have in some ways undermined the strength and ability of the industry to grow. These challenges include periodic price increases, inroads made by the gas industry, and negative publicity from environmental issues. Fortunately, the industry has found a way through and has been able to maintain itself as an important source of fuel for U.S. consumers.
However, as we move into the 2020s, the challenge of global warming has come to the fore. Essentially, many of the States where oilheat has a significant share have decided that the only response to global warming is to move to a carbon-free economy where heating oil, natural gas, propane and coal have seen their heyday.
Technology has made both wind and solar more attractive options than they were a decade ago.
Reports have indicated that wind power may be able to be produced at two cents a kilowatt per hour. At that price, the equivalent price for heating oil would need to be $.86. The two cents does not include the cost of distributing and transmitting that electricity, which may end up being the most important cost factor.
Transmission and distribution could add approximately $.05 according to the U.S. Environmental Protection Agency (EPA). This would be an equivalent price of about $3 per gallon. I am skeptical that these marginal costs will hold as the grid itself changes radically based on how and where the power is generated, as nearly every part of the electrical grid will need to be rebuilt, expanded and improved.
Perhaps the greatest uncertainty is how to store electricity. Wind is not 100% reliable and solar obviously does not work at night or when covered with snow. Plus, its efficacy is greatly reduced in the winter.
So, how does a carbon-free grid manage itself if the power producers are not meeting demand? That is where batteries come in and they will be a whole new cost for the grid. Unfortunately, battery technology, while having improved greatly, is still far short of what we need as a society. Thus, to go to an all renewable-based electrical future will require tremendous investments in storage of electricity and a vast overbuild of the infrastructure making the power.
Therefore, oilheat and its pricing has a good chance of being competitive on a price basis with electricity in the future.
Despite the concerns and costs associated with a reliable electric future, many of the States are moving forward. From our vantage point, perhaps the biggest concern is the movement to encourage the installation of heat pumps in all of our markets.
The States are incentivizing their use by providing subsidies for their installation and, in some markets, considering a tax on heating oil to develop a fund to pay for their installation.
The National Oilheat Research Alliance (NORA) and many others are skeptical that heat pump technology will be able to meet the needs of homeowners.
On a cold day, the efficiency of heat pumps falls dramatically. In some cases, this may mean that the house will not be able to maintain a comfortable temperature (for more information on heat pumps, see the Connecticut Energy Marketers’Association [CEMA] website learnaboutheatpumps.com).
Additionally, in all cases, when the temperature goes down the demand for electricity will grow dramatically. As the demand grows, the efficiency of the heating system falls.
As the weather gets colder, the ability to have enough electricity becomes increasingly difficult. The “hope” is that we have enough supply in the system to match the increased demand and not create a life-threatening emergency. However, to do that will require a tremendous over-build of production (windmills), storage (batteries) and distribution (wires).
While we are skeptical of the ability for this system to succeed, we are currently facing the prospect of government resources being used to reduce our share of the market.
However, does it have to be this way–are we like Ebenezer Scrooge in “A Christmas Carol,” sentenced to a miserable fate?
No. Over the past 20 years, NORA and many others have worked to establish new technologies and alternative fuels.
Liquid fuels have the amazing ability to store energy far better than a battery. Our ability to store fuel in large tanks at terminals and at homes provides our industry and society a way to smooth demand. Plus, we have a proven record of succeeding in difficult circumstances. In fact, we are often called to bail out the gas and electricity industry at peak demand periods.
As we meet the challenge of electrification, we will need to rethink who we are. We currently describe ourselves as selling oilheat—and while for nearly a century it has been a petroleum-based product, it does not have to be.
Converting our petroleum-based product to an alternative liquid can be done, and our greenhouse gas profile can be sharply reduced to zero, or perhaps made negative. Biodiesel has the best potential to accomplish these goals. It is made from a number of waste streams such as soy oil after the beans have been crushed to provide animal feed, or the grease from restaurants.
Each of these oils can be easily converted to biodiesel– a fuel that is designed to blend into heating oil and not disrupt equipment that currently uses petroleum distillates.
Currently, The American Society for Testing & Materials (ASTM) has indicated that using a blend of 95% heating oil and 5% biodiesel is the same as using heating oil. It has also established for a fuel that is 20% biodiesel and 80% heating oil. This fuel is available and is being used widely. In fact, many dealers are currently selling fuels at much higher levels of biodiesel.
To achieve the reductions in carbon emissions, the States are considering requiring us to blend at 50% by 2030 and 100% in 2050. Essentially, meeting societal goals will require the industry to move from a fuel derived from fossil fuel reserves to a fuel that comes from plant material.
How hard will this be?
The current biodiesel may be incompatible with some of the seal materials currently used. It may also be harder to detect by the automatic light-sensing controls. Thus, at worst, we may need to change some soft materials in the home and possibly either adjust the cad cell or change light-sensing technology. This is easy, well-known, and within the capabilities of the industry.
Additionally, because of cold flow issues, it may also be necessary to heat outdoor tanks.
At the dealer or wholesale level, it may require tanks to be insulated and heated. Trucks may also require heating. While these will carry an expense, they are feasible.
While these changes may be costly, the alternative is to ignore what customers/voters/government officials are demanding. Thus, we are in the situation of adapt or perish.
Most importantly, we know how to achieve these goals, and we know how to achieve them cost-effectively. I am not sure that can be said for our competitors, which means that if we are willing to seize the advantage, we can succeed. ICM
September 16, 2019 might go down as a watershed day in Oilheat history, as a resolution passed unanimously at the New England Fuel Institute (NEFI) HEAT conference committing our industry to dramatically reducing our Green House Gas (GHG) impact. This could be pivotal in confronting an existential threat to the industry’s future.
The goal is to reduce GHG emissions by 15% in 2023. This could be accomplished by universal adoption of a 20% blend of biodiesel or renewable diesel in heating oil. By 2030, we would reduce GHG by 40%, using a 50% blend, and by 2050, the goal is to be at a Net Zero level. Obviously, accomplishing this would require big, important breakthroughs. However, it doesn’t feel like we have much of a choice, especially if we want to have much of a future.
Many in our industry are only tangentially aware that in statehouse after statehouse, well-intentioned legislators are working to put you out of business. They are embracing accelerated electrification as the cornerstone of their effort to push back the growing threat of global warming. In the current politically charged atmosphere, there seems to be even less room for the rational exploration of options. If we’re not careful, the march to electrify will become the Bataan Death March for Oilheat.
Many legislators seem oblivious to the real costs and obstacles that stand in the way of achieving their objectives. They aren’t overly worried that for the foreseeable future, electricity will be produced by burning coal and other fossil fuels. They significantly underestimate the real costs of conversion. They disregard the reality that homeowners use heat pump incentive money as an easy way to add air conditioning, without actually eliminating their boiler or furnace. They haven’t learned the lessons from the inefficiencies of the efficiency initiatives initiated after 2008. Therefore, their estimates of how quickly they can reduce carbon emissions following this playbook are greatly overblown.
At the same time, by betting the farm on the electrical grid, which has proven to be vulnerable to outages even at current demand levels, and purposely undermining the rest of the energy supply infrastructure, they leave us subject to catastrophic disruptions.
It doesn’t matter
But guess what? As true as all that might be, it doesn’t matter. In the current climate, the people with the votes don’t buy it, at least not yet. Many see themselves as a new John Kennedy who famously said, We don’t know how to get to the moon; but damn it, we’ll set that goal; and figure it out as we go along. Some say that’s vision, others say the path to hell is paved with good intentions. In any event, your business is currently seen as having no place in the world they are trying to save.
It doesn’t matter if you agree or disagree that global warming is the central issue of our future. They do, and they have the votes to kick you off the island, whether with onerous carbon taxes, regulatory restrictions, bribes to incent customers to convert to heat pumps—you name it.
However, that’s where it gets interesting. I happen to be one of those who believe that global warming, whether man-made or not, is a real threat to our children’s future, and that we can’t fiddle around while the planet burns. My concern is that by pursuing electrification as a panacea, our state governments are doing just that. Without attention to how this is really going to play out, they can take us down a road that wastes time and money we don’t have. I also believe our industry can offer a better, faster, cheaper pathway to solve the problem.
Figuring out our strategy
This brings us back to the NEFI summit and bigger industry strategy. I think there are two key questions:
a) What should our strategy be to influence the policy pathway in a smarter direction?
b) How do we galvanize the resources and energy to push our way into the future energy mix despite the visceral, simplistic, anti-oil reaction of many of those currently shaping policy?
If we stand stridently against electrification, choosing only to point out the flies in its ointment, we are likely to lose all standing to be part of any solution. Years ago, I pushed back against industry-funded efforts to bash natural gas in order to deter conversions. It played well for us, but didn’t do anything to make heating oil a positive option to customers who were not part of the core believers. That opinion was later born out by research we conducted in six states with National Oilheat Research Alliance (NORA) funding.
Likewise, while our concerns about the electrification panacea are legitimate, the fact is that the horse is out of the barn. Legislative critical mass supporting it exists. It’s like standing in front of a car driving 50 miles an hour, holding a shield in front of you.
What’s more, many of your customers will convert on their own if they do not see your fuel as part of the solution. The research clearly shows this, especially among younger homeowners who will increasingly buy your current customers’ homes as they age. The single greatest drive for conversion is the perception the customer can save money; but it is activated by the perception that oil is dirty and bad for the environment, regardless of what the state legislatures say and do.
So, I stand firmly in the camp of those who argue that our message should be:
We support your aspirations. We want to reduce the overall carbon footprint, too. However, there are operational issues with the course you are pursuing. We want to help you achieve your goals faster, and at less cost, by being part of your solution.
That solution is to accelerate the percentage of bio-diesel we deliver to customers in a way that is much more aggressive than we did before. When you combine large percentages of bio with our existing ultra-low sulfur fuel, you reduce your carbon footprint better and faster and cheaper than any other option. And, not for nothing, it is a pathway that natural gas can’t offer.
This will not be easy, and I appreciate the large technological, operational and promotional hurdles it faces. But the alternative—simply hoping there will be a change in the political winds—feels like a losing strategy. I plan to be part of the industry’s solution, and hope you will be too. ICM
Rich Goldberg, President,Warm Thoughts Communications, Inc, is a 30-year advocate for our industry. You can reach him at [email protected], 201-330-9276 ext 222.