Interest in heating oil buying groups is on the rise. Customers and communities are increasingly aware of the cost of energy and the need to buy and use energy as efficiently as possible. Here at Nicholl Oils we support community oil buying groups where possible, and have laid out this handy guide outlining the pros and cons of oil buying groups.
REDUCTION IN UNIT PRICE
Most oil distributors offer a reduction in quoted schedule prices for larger volumes as it reduces delivery costs. The advantage of a buying group is that all members benefit from the total volume price reduction irrespective of the individual volume ordered.
FEWER GOODS VEHICLE MOVEMENTS
A buying group of five houses has the potential to reduce the number of delivery tanker journeys in the area from five to one. If each member of the group takes three deliveries a year, this could reduce the number of tanker movements from 15 to just three – safer for the community and better for the environment. Don’t forget that this advantage may be lost if there are too many minimum deliveries as there will be more truck journeys required to keep the tanks topped up.
Local hamlets or villages can work together for communal benefit, which can help to unify communities.
KEEP YOUR BUYING GROUP NUMBERS SMALL AND VERY LOCAL
Once the total volume exceeds about 18-2000 litres, there will be no further volume discounts as a second vehicle may be required. Also, remember that suppliers route vehicles to deliver in a local area anyway, so there is little advantage if the group is very spread out – it is more efficient to have four next door neighbours wanting a total of 4,000 litres than a group spread out over a parish wanting 8,000 litres. Five or six members is the ideal size to aim for.
ONLY INCLUDE PEOPLE IN THE PURCHASE WHO NEED FUEL
Very often, group organisers try to maximise the volume by encouraging people to top up just a small amount, believing that all volume counts towards the best possible price. Your oil distributor will always take into account the number of deliveries as well as the total volume to calculate the group price, so there is no advantage in adding a few small top ups to an order for three or four fills. To deliver a lot of minimum volumes of 500 litres takes more time and so increases costs to the whole group.
Please give precise volumes required for each member of the group. For example “customer X requires 500 litres and customer y requires 800 litres” this will enable the distributor to load and deliver the correct volume for your buying group and to calculate the group price accurately. Statements such as “top up customer Z” do not provide this information which makes calculating the total volume and efficient routing of the deliveries impossible.
Advantages of individual buying:
PRICE BENEFITS ARE STILL ACCESSIBLE
The perceived price savings of a buying group are less than supposed. The difference between a buying group price and what’s available to an individual buyer can be, and usually is, less than 2p per litre. On a 1,000 litre delivery, the saving to buying group members will then be less than £20. By watching the market price of crude oil and buying when prices are lower, you could easily save 5p per litre against buying through a group a few weeks before or after, when the prices are spiking.
SPREAD YOUR PAYMENTS
Buying directly from a distributor can give you more opportunity to spread the cost of home heating by setting up a budget payment plan to pay by direct debit or credit card. At Nicholl Oils we make significant efforts to accommodate regular buyers who, on occasion, find it difficult to fund the cost of running a heating system during the winter.
Most individual customers form a close working relationship with their selected fuel suppliers. By talking directly to us, you can ensure that we know all the necessary details to make a safe delivery.
You can download advice on oil buying groups from The Citizens Advise Bureau here.