i understand he has to also make money but if i pay $1.3299 for home heating oil what is he paying for that oil he sells me and same thing with the propane guy i know there are a bunch of different factors such as the size of his business and such but just wondering on the averagewhat kind of percentage they like to use
Tough to lookup, since there aren’t many publicly traded fuel oil delivery companies, and that’s really the only easy way to get margins.
The one I found was Star-Gas Partners, L.P, ticker SGU & SGH. According to their annual report, the sales of Heating Oil product was $481 million, and the cost of that product to them was $289 million. That’s a markup of 66%, but I don’t think that includes delivery costs. For propane, it was $137 mil and $72 mil, which is 90%.
Also keep in mind that when you get a fixed-price contract for heating oil, there is no fixed margin, since their price fluctuates but yours does not.
I’m not sure if that’s correct. I was talking to a natural gas producer from Southern Ohio a few months back and he had chosen to sell this winter’s production to the gas company for a fixed price. And, yes, he was quite happy with how much he was gonna make this year. But, he added that last year(Winter of 1999-2000) was his worst year ever as prices were so low at that time.
Of course, if the gas/propane/fuel oil supplier is buying their product off of the “spot” market on an “as needed” basis, their cost would indeed fluctuate.
Fuel oil on the “spot” market closed Friday at 80 cents. jjason paid $1.33. But you have to figure in delivery cost, labor,etc. I would bet the profit margin is much lower than you think.