Firms' fear over community oil schemes

Domestic heating oil delivery Image copyright bbc
Image caption A total of 19 community councils have adopted bulk-buying plans to secure lower prices and delivery costs

Bulk-buying oil to help save householders money has been growing in popularity in recent years, but some local oil suppliers in the West Country have complained it could be "unviable" and "unattractive".

So-called community oil schemes have become increasingly common over the past two years since the idea was first pioneered by a charity in Oxford in 2010.

There are now similar projects in 19 counties and there has also been an increase in the number of informal bulk-buying groups.

But some firms have expressed mixed feelings about the changes to the way domestic heating oil is bought by consumers.

'More competitive'

"When they literally have eight or nine people living in a street or village buying together, we're able to build up a half or three-quarter load and we still have space to cater for our other individual customers - so it works for everyone," said David Heatherall, managing director at Silvey Fuels in Bristo.

"Once it becomes more than a load then it ceases to become attractive for us, as it starts to control our business, and with the discounts people expect, it becomes unviable."

Ford Fuels, based in Bristol, serves the south-west region and between 2008 and 2010 it saw an increase in the number of bulk-buying queries from five to 20 different groups.

The company's director, John Ford, said: "It makes things more competitive because these groups go round to different oil companies and a company like ourselves - who pride ourselves on service we've built up over many years - that goes out the window.

"We don't have the competitive edge of a major oil supplier but we can do 'run-outs' if people run out of oil, we can deliver the next day, which other people can't do.

"We find these groups order a lot smaller amounts, so rather than have a tank filled up from empty, we're going round with 400 to 500 litres, which obviously increases our workload."

Community oil schemes normally ask members to sign up to a minimum amount of 500 litres.

'Immediate saving'

"Rural community councils support rural life, and it's important that rural shops and businesses survive and are not damaged in any way," said Oxfordshire Rural Community Council's chief executive, Linda Watson.

"In the negotiation process, it's not feasible to buy huge quantities so all sizes of suppliers are approached in the negotiation process.

"Sometimes the price depends on when they in turn buy from the international wholesale market."

The Community Council for Somerset launched its bulk-buy project in September.

It has 170 members and is on target to reach 600 members within its first year of operation and has proved popular.

Its co-ordinator, Geoff Nickson, who is based in Broadway, near Ilminster, said: "Back in December, my current provider was going to charge me 4p a litre more than what I paid on the scheme, so I made an immediate saving of more than £20 straight away.

"I've promoted it quite heavily around the village, and it's gradually rolling forward, it's a good scheme and you can save money."

For community-run schemes, relationships with local oil suppliers is important.

"Once we get the critical number of people there is an advantage for small oil suppliers as the marketing is done for them, as we can go to them and say here you are there 20 customers in this area who all want oil this month," said Ms Watson.

"We want to give them business, rather than the large multi-corporates."

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