BANGOR (AP) – Maine oil dealers already frustrated over the discount they’re required to give low-income fuel customers who qualify for federal heating assistance are being asked by the state to dig even deeper this season.

At least one oil dealer has answered: No thanks.

Webber Energy Fuels decided last week to withdraw from the Low Income Home Energy Assistance Program as the Maine Oil Dealers Association and the Maine State Housing Authority battle over a steeper discount that’s being imposed.

Jamie Py, president of the Maine Oil Dealer’s Association, said the discount could drive oil dealers to charge higher prices to other customers, withdraw from LIHEAP as Webber did, or simply take a serious financial blow.

The Maine State Housing Authority is offering two options for oil dealers that are designed to stretch federal LIHEAP dollars. The option that’s causing oil dealers to cry foul is a discount on the daily cash price for LIHEAP customers.

Last year, oil dealers had the option of offering either a 6 cent discount on LIHEAP purchases or a lesser 3 cent discount for LIHEAP customers’ purchases for the entire season, whether or not LIHEAP money was used. Most LIHEAP customers normally pay out of pocket for some of their oil because LIHEAP doesn’t cover it all.

This year, there’s a 7 cent discount that applies to all oil purchased by LIHEAP customers, and it applies to the entire season’s purchases.

That means oil dealers’ losses of “hundreds of thousands of dollars” last year could grow to “millions of dollars” this year, Py said.

“Somehow the dealer has to make up for that discount. In a competitive atmosphere, the dealer can do one of two things: cost-shift that discount onto the rest of your customers or reduce the benefits and wages and cost capital within your business,” Py said. “Most businesses are probably doing a combination of both.”

The Maine Oil Dealer’s Association wants Gov. John Baldacci and the Maine State Housing Board of Commissioners to overturn the discount. At the least, the association wants to return to last year’s discount rates.

Mike Shea, president and CEO of Webber Energy Fuels, said his company’s board voted to pull out of the LIHEAP program, saying its discount plans are unprofitable. Shea said he stands to lose thousands of LIHEAP customers.

“There is a true misunderstanding about the cost margins and the competitiveness of this industry,” Shea said.

But MSHA Commissioner Dale McCormick is holding firm. She remained confident that “many Maine oil dealers will continue to participate in LIHEAP and help serve the low-income families in their communities.”

Copy the Story Link