This classification covers companies primarily retailing fuel oil. Companies that primarily sell fuel oil burners are in SIC 5074: Plumbing and Heating Equipment and Supplies (Hydronics); those that install and service fuel oil burners are in SIC 1711: Plumbing, Heating
454311 (Heating Oil Dealers)
Dun and Bradstreet listed 8,391 establishments doing business under this industrial classification in 1997. Companies in this industry sell motor oil for vehicles and fuel oil for heating buildings, with the largest earnings coming from heating oil sales. Residential customers are the primary consumers of heating oil. In 1999 the U.S. Department of Energy reported that 16 million American homes use a total of 11 billion gallons of heating oil each year, which represents 700 gallons per household. Schools, hospitals, businesses, and industry account for the bulk of non-residential heating oil sales. Similar figures for motor oil consumption are not updated regularly. Retail sales of motor oil in the U.S. reached $4.2 billion in 1995, the last year statistics were available.
Industry sales of heating oil vary with the season and geographic market. Demand is normally higher in northern states during the winter, causing oil prices to rise. But price is also affected by regional climatic changes. Nearly the entire continental United States experienced a series of mild winters in the late 1990s. In the fairly typical winter of 1996 the average price of heating oil reached $1.14 per gallon. But two unseasonably warm winters caused a 34-cent per gallon dip in price. By February 1999 heating oil prices had fallen to 66 cents per gallon. Nine months later heating oil distributors were bolstered by forecasts of a bitterly cold winter for the northern states. Industry experts predicted that the average price of heating oil in winter by the turn of the century might hit $1.06 per gallon.
Fuel oil dealers can also be affected by international conflict and domestic politics. The 1970s energy crisis inflated the price of crude oil (which sets the pace for heating and motor oil prices) and reduced profitability for gasoline and fuel oil dealers. Gasoline prices peaked again in January 1981 shortly before the Iran-Iraq oil embargo. Oil prices collapsed in 1985 and 1986, when Saudi Arabia and Kuwait launched an oil price war in OPEC. In 1993 the industry successfully launched a campaign against President Bill Clinton's proposed 60 cents BTU (British Thermal Unit) tax on heating oil. The tax was eventually lowered to the same level as tax increases on other forms of energy. Both motor and heating oil prices have been affected by the ongoing crisis between the U.S. and Iraq. Dating back to the 1991 Persian Gulf War, fuel oil prices have ebbed and flowed with tensions in the Middle East. In November 1999 Iraq suspended exports, forcing crude oil to its highest level since Operation Desert Storm.
Two of the largest heating oil distributors in the 1990s were Petroleum Heat and Power Company, Inc. and Star Gas Partners L.P., both of Stamford, Connecticut. Petroleum Heat and Power was widely considered the largest heating oil distributor in the United States, with 340,000 customers in the Northeast and Mid-Atlantic states, and $548.1 million in sales in 1997. Star Gas reported more than 166,000 customers in 1997 and $161.4 million in sales. In 1999 Star Gas purchased Petroleum Heat for $368 million. It also purchased Maryland-based Diamond Fuel, New Jersey-based Foreman Hardware Co., Inc., and Ohio-based Mohrfeld Inc. in 1999, adding about 1,800 accounts to their customer base. Another industry leader was Warren Equities Inc. of Providence, Rhode Island. The privately-held company owns Extra-Mont gas station/convenience stores, in addition to selling fuel oil. In 1997 it reported sales of more than $900,000 and a payroll of 2,100 employees.
By the late 1990s the three best-selling brands of motor oil were Pennzoil, Quaker State, and Valvoline. Pennzoil held 21.8 percent of the market, Quaker State had 15.9 percent, and Valvoline had 14.2 percent. In 1999 Pennzoil Co. acquired Quaker State Co. for about $1 billion and formed the Pennzoil-Quaker State Co. The merger joined Pennzoil's 1,516 Jiffy Lube centers with Quaker State's 600 Q Lube oil change stores. Pennzoil-Quaker State anticipated having about $2.7 billion in assets, about $1 billion in equity, and annual sales of about $3 billion by the turn of the century.
Hoover's Online. Hoover's Company Profiles. Austin, TX:1999. Available from http://www.hoovers.com .
U.S. Department of Commerce. 1997 Economic Census. Washington, D.C.: Bureau of the Census, 1995.