Selling fuel oil and oil-burning appliances is the core business model of FON’s readers and it remains the core focus of our magazine. However, it is becoming more apparent each day that business diversification is of critical importance.
The National Association of Oilheating Service Managers announced a name change to National Association of Oil & Energy Service Professionals at its recent annual convention. And Michael Trunzo, the new president and chief executive officer of the New England Fuel Institute, highlighted this reality (along with a range of other speakers) at NEFI's recent convention.
There are a range of factors at work that have pushed diversification to the forefront, though that trend has long been a background reality for the industry. These include highly volatile oil prices that stay at the top end for extended periods of time; the likelihood of stable to reduced natural gas prices linked to a range of factors including new natural gas reserves opened up through the fracking process; and the current environmental focus on green solutions that is strong among both legislators, regulators and consumers in the key oil markets.
The industry is responding aggressively to each of these challenges. For example, we can now claim heating solutions that match or beat gas as a green heating fuel. However, while the future might, and in my opinion will likely, offer some relief and stability in these areas they are equally likely not to go away. But then neither is oil heating.
Numerous industries face similar challenges and the key to success is developing a strategy that moves an industry and a company within that industry forward. For an industry that in many cases used to sell its customers coal, this is not all that new. Further, there are clear opportunities to leverage existing core competencies to not only reduce a loss in market share, but to grow a business.
On the fuel side obvious areas include offering propane service (as many of our readers already do) or move into diesel marketing or biofuels. There is already competence in dealing with fuel suppliers, fuel markets and fuel delivery customers. Even areas as exotic to the industry as the sale of electricity and natural gas to customers (made possible by deregulation) leverage existing core back office and administrative capabilities.
On the HVAC side, these opportunities include expanding service to become a more generalized contractor selling and serving the range of heating and air conditioning appliances or moving into associated areas like plumbing or electrical work.
The industry has skilled drivers. In the offseason when they are not delivering much oil, what else can they be delivering?
There is always a balance in business focus between taking on new opportunities and moving out of core competencies, which can minimize potential success. The positive take away is that the fuel oil industry as it stands today can do an awful lot of diversification and still stay comfortably close to those core competencies.