Oil Companies Feel The Heat

There's a chill in the air up and down the East Coast this week -- but much of the winter has been mild, even warm. Correspondent Anthony Mason looks at what that means for a report on tonight's Evening News.
On a quiet street in New Haven, Connecticut this week, Jamie Tutino was sitting in the cab of his heating oil delivery truck. "I never though I'd be delivering oil in a T-shirt in January, but that's what I was wearing just last week."

Jamie has been a driver for Tracey Energy, a New Haven heating oil company , for seven years. "I've never experienced a winter like this ever," he said with a sigh.

The unusually mild winter may be giving many of us a big break on our energy bills, but its sending shivers through the heating oil industry. From Maine down to Virginia and in parts of the Midwest, heating oil usage is off double digits from the typical winter. Jennifer Tracey, whose father and grandfather ran the business the family started 75 years ago in New Haven, says her volume is off a staggering 30%.

The problem: companies like Tracey typically buy their oil almost a year in advance. So they bought this winter's oil back when the market price was much higher. Now they can't sell all of it and have nowhere to store it. Jennifer Tracey estimates she will lose $300,000 on the unsold oil customers didn't need this winter. And she may need to take a bank loan to pay it off.

The company usually has 8 trucks out on the road all day at this time of year. Instead 3 are sitting idle in the garage. And drivers like Jamie Tutino have seen their hours drastically cut back. Tutino is getting married in October and was hoping to buy a house. "It puts a hurt on every little decision you do," he told me. "But I'm lucky 'cause a lot of guys out there don't have a job right now."

Gene Guilford who heads the Independent Connecticut Petroleum Association says a dozen businesses have had to close and merge with other companies. Dealers are losing hundreds of millions of dollars and even the cold snap now gripping the Northeast won't really help.

"Nothing is going to save the season," Guilford says. "The axiom in this business is whatever you've lost you can never make up." Home heating oil companies say they'll be paying for this winter for years to come.

  • Anthony Mason

    CBS News senior business and economics correspondent; Co-host, "CBS This Morning: Saturday"