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Buying groups negotiate with oil companies for heating oil

PORTLAND, Maine - Neighbors, co-workers and others with common ground are banding together to negotiate discounts for heating oil this winter at a time when energy prices are high and possibly going higher.
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In Cape Elizabeth, Maine, a neighborhood association contacted several oil companies seeking savings for its 70 members for a fixed oil price for the upcoming heating season. It came away with quotes of 20 to 30 cents a gallon below what residents could get going it alone.

At those prices, somebody who burns 1,000 gallons over a winter could save up to $300, said Tom Getchell, who arranged the deal for the Stonegate neighborhood, where he lived until he moved this summer.

"That's not chump change," Getchell said.

New England is hit particularly hard by the high price of oil, which is used by a bigger proportion of homes for heat than any other region of the country.

To soften the blow, people who are affiliated in one way or another - by living in the same neighborhood, working at the same company, belonging to the same union or simply having similar interests - are forming buying groups to negotiate discounts.

Cooperative buying isn't a new concept. It's commonly used by businesses and government to get better prices from dealers who can deliver large volumes to a single group of customers.

But as the price of home heating oil has risen, so has the number of groups that are negotiating with oil companies in hopes of saving a few bucks this winter.

"There's no mystery what's driving it," said Bob Moore, senior vice president with Dead River Co., a fuel company that works with some buying groups. "Prices are going up, and future markets are telling us they'll be higher next winter, and people are doing what they can to get them down."

A Saco, Maine-based group called Donkey Card LLC acts as a buying group that offers negotiated discounts for heating oil, as well as other products ranging from real estate to financial services. The group aims to promote the Democratic Party, but anybody can join for $35 a year.

The group, which has more than 525 members, has negotiated prices of $2.45 to $2.50 a gallon this winter, said Executive Director Barry Noble.

Many Maine homeowners are learning they'll be paying up to $2.70 a gallon or more for a fixed or capped price for automatic delivery this winter. There's been speculation that the cash price could hit $3 or more.

People have little recourse against high oil prices other than to create collectives, Noble said.

"Oil goes through everything and affects the entire economy," he said. "So as the middle class gets more and more squeezed, people are going to band together."

The Woodlands Homeowners Association in Falmouth, Maine, worked out a deal for a fixed price of $2.39 a gallon, said board member Jeanne Grindlinger. About 75 percent of the neighborhood's 98 homes participate, with a 1,500-gallon minimum purchase.

Grindlinger knows of other neighborhoods where people have called up their neighbors, formed groups of 12 to 20 homeowners and negotiated discounts. The deals, she said, benefit homeowners who get relief from high prices, and dealers who get blocks of new customers without having to recruit them one by one.

"They've locked in a large number of people for a large amount of oil," she said.