Ask RAY: Fuel Co-ops

In this issue we are reporting on oil buying co-operatives also called oil syndicates or oil clubs.
If you live in an area that does not have mains gas then there is a very good chance you heat your home with oil.  In the past two years the cost of heating oil has rocketed and many householders are struggling to pay the increased bills.

One way of reducing the cost of oil is to join a buying group.

So what is an oil co-operative?

The idea is simple.  A group of people in the same area join together and order their heating oil in one order.  All members pay the same price per litre regardless of the size of their order.  This is particularly helpful to those on low incomes who would otherwise be penalised for small orders.

How much can I save?

In March 2011 the Lower Swale Syndicate (at that time seven villages were in the scheme) ordered 200,000 litres of heating oil and paid 54.98 pence per litre.  It is estimated that members save 10% to 12% per order which works out at between 3 to 5 pence per litre.  All prices are quoted in pence per litre and exclude VAT.

How does this work?

The co-operative co-ordinator puts a notice in the parish magazine, posters in the village and phones/e-mails members to let them know when the next order will be.  Generally orders are placed every two months.  Members let the co-ordinator know how much oil they want – either a fixed number of litres (minimum 500) or “fill up the tank”.  However the co-ordinator does need an estimate of the likely quantity so he has an idea of the total volume when negotiating with the suppliers.  The syndicate co-ordinator phones round the various companies for prices based on the total volume and places an order with the best value.

The supplier will offer a lower price because it dramatically improves their delivery efficiency resulting in few tankers movements and significantly reduced delivery mileage.

The minimum order is 500 litres and the oil is delivered on an agreed day. The supplier leaves or sends each person an invoice for their own oil.  The invoice is payable direct to the supplier within two weeks by cheque or credit/debit card.  The co-operatives do not handle money.

RAY has supported a number of rural communities to set up oil co-operatives.  Please contact Kathryn if you would like our help too.