How Co-ops & Condos Can Prevent Oil Overcharges

"The price was too high and there was no loading temperature on the delivery tickets," Meister explains, revealing a little-known nuance. While most co-op and condo board members understand the importance of the price of heating oil, few grasp the importance of oil's temperature.  But it's something you need to understand because it could save – or cost – your building a truckload of money.

Simply put, No. 6 heating oil is viscous stuff that ceases to move if its temperature is allowed to drop to 55 degrees Fahrenheit.  Therefore, the oil is heated, sometimes as high as 140 degrees, before it's loaded into delivery trucks at oil terminals. As a truck makes its rounds, the oil in the truck cools – especially in winter – and it actually contracts.

Although the temperature at the time of delivery can vary widely, the New York City charter has decreed that No. 6 fuel oil must be billed at a base temperature reading of 60 degrees, with a tolerance of 25 degrees.

An elaborate chart provides a so-called "factor for correcting volume" to 60 degrees.  Every temperature has such a factor. Oil loaded at 100 degrees has a factor for correcting volume of 0.9838. Therefore, if 1,000 gallons of oil is loaded into the truck at 100 degrees and delivered to your building, the amount you should be billed for is 1,000 multiplied by 0.9838, or 983.8 gallons – provided the bill is corrected to 60 degrees.

Unfair-enheit

All the bills that Meister examined at the co-op stated that the No. 6 oil been delivered at a corrected temperature of 85 degrees – the maximum allowed by law, given the 25-degree tolerance from the target of 60 degrees. A corrected temperature of 85 degrees will add about three or four cents to the cost of a two-dollar gallon of oil, according to a veteran oil industry executive. Do that all winter long and come springtime you'll be talking about real money.

"This has been going on for years," Meister says. "In order to compete, the little guys have to cheat, unfortunately. You have to be very, very careful."

He cited two cases from 2007, when officers of Mystic Tank Lines in Queens and T&S Trucking Corp. in Brooklyn were indicted for billing customers for $75 million worth of undelivered heating oil, then selling the oil for cash.

There are a number of ways for boards to protect themselves from getting chiseled.

By law, oil trucks must have a meter that's inspected yearly by the city's Department of Consumer Affairs. At every stop, the driver must read the meter and leave a delivery ticket with you, stating how many gallons were delivered. Some companies' delivery tickets include the oil's loading temperature; some do not. The company then sends you a bill, stating price per gallon and the corrected temperature at time of delivery, along with a copy of the delivery ticket.

In order to compete, the little guys

have to cheat, unfortunately.

You have to be very, very careful.

If you know the loading temperature and the corrected temperature, it's easy to read the chart and determine if you were billed the correct amount. If the corrected temperature is higher than 60 degrees, you're probably being charged too much. 

The vice president of one New York oil company, speaking on condition of anonymity so that he doesn't anger business rivals, advises boards to have the super read the building's oil tank meter – known as a petrometer – immediately before and immediately after every delivery.  He also advises having the building's petrometer verified at least once a year.  "If you do that," he says, "you're going to be in good shape."

"There's something even better than taking a reading from your petrometer," adds another oil company executive.  "On a regular basis, have your super put a dipstick in the tank to know exactly how much oil you have in the tank.  Another safeguard is to have the super take a petrometer reading every day – and keep records. If there are sudden fluctuations, that can be a red flag that you've got a faulty meter, or possibly a leak."

Meister adds that the super should make sure that the delivery driver re-sets the truck's meter to zero before pumping the oil, and that the delivery ticket is accurate.  He also advises boards to ask their oil company for a discount for prompt payment – usually a one percent reduction if the bill is paid within 10 days.

The good news here is that you don't have to be a math whiz to make sure you're getting billed fairly. All it takes is a little common sense and a little diligence.

For articles going back to 2002, join our Archive >>