Everyone’s got stories now about the first cold snap of 2018. Many fuel customers spoke of getting deliveries of paltry amounts, with promises for more once the extreme cold started lifting and the number of requests for help abated somewhat. There were lots of tales of woe at Kosco, Paraco and Heritage Energy, three of the Hudson Valley’s big suppliers of fuel that’s not natural gas or electric. Ken Davenport of Heritage and Barry Motzkin of Paraco/Kosco noted that this was the worst cold snap of 15 days since 1961. It came just as the companies started working together as a newly merged entity.
“Effective December 1, Paraco purchased all of Heritage’s propane business,” said Motzkin, whose father and uncle started Kosco in 1956, and who now runs operations for his company and Paraco in the Hudson Valley. “As of January 1, we’ve also entered a joint venture between Kosco and Heritage Energy.”
“The new company is called Kosco Heritage,” added Davenport, whose family started a company that merged with Garraghan Oil in 1946 to form Heritage. “We’ll handle the fuel oil, diesel fuel and service contracts for Heritage, Kosco and Paraco throughout the Hudson Valley. Paraco will handle all the propane.”
Unprecedented demand
Motzkin talked about Kosco’s large storage infrastructure in the region, designed to relieve any delivery and other demand challenges. But he added that the cold snap had created an “unprecedented demand.” He and Davenport also discussed other elements that have come into play this winter.
First off, both men said, a “historically warm” December suddenly dived into a colder-than-usual January. Shifting climate patterns have seen most customers using 25 percent less fuel oil than they did in 2000. Finally, there’s been a major shift in storage. Thirty years ago, 30 million gallons of fuel oil could be stored up and down the Hudson. Now, Kosco has a capacity of 3.5 million gallons. While 500-gallon fuel tanks used to be buried in most yards, now the normal above-ground storage tank holds 275 gallons of fuel oil. Being above ground, that oil can start gelling at low temperatures.
“There’s been a lot of stress to our systems,” said Davenport.
“With propane, there’s even more potential for infrastructure problems,” added Motzkin. “You have to deal with rail issues, pipelines, trucking issues.”
Extreme weather has forced everyone to “stay ahead of things as best you can.” Both spoke about how the cold coming during two holiday weekends made things worse. More people were at home, turning the heat higher than usual for fear of bursting pipes.
During the cold snap, state and federal authorities waived a regulation limiting the number of hours drivers and technicians could work, Motzkin said. The result was a push that saw many employees clocking in 70-to-90-hour weeks.
Did the freezing of the Hudson affect things the way it used to?
Motzkin noted how there’s a strong barging agreement in place to address a frozen river. Davenport spoke about how “demand will always change price. With unprecedented demand you’ll be seeing the market will spike upwards.”
The companies have been working with a Boston fuel-additive company on the gelling problems that occur when fuel oil gets too cold. They suggest that those with such problems might consider using kerosene in winter, or insulating their fuel supplies.
A one-house bill was passed in the state Assembly in answer to the cold snap and problems with propane delivery throughout the state. The legislation aims to open up options for propane delivery when an emergency has been declared, allowing companies other than a tank’s owner to fill that tank, and the blocking of suppliers from charging extra fees or penalties for filling tanks, or other companies from charging penalties for outside filling of a tank during an emergency. The bill is still awaiting a sponsor or timeline in the State Senate.
“It’s a safety issue,” Motzkin noted. “Not every company has the same insurance against liability, the same training of personnel or integrity.”
Watching the weather
How long did it take to work out the new partnership between these three fuel behemoths? “It goes back to 1956, when my father and uncle were buying an oil company to start Kosco and meeting on Manor Avenue in Kingston with Pat Garraghan’s grandfather and Ken’s grandfather,” Motzkin said. “The Davenports and Garraghans were welcoming my father to the business. We’ve all been competitors, but also doing business ever since, for many years and decades.”
“For the last five winters, Kosco has purchased its fuel oil from Heritage,” Davenport said. “It felt like kind of a natural move to do this.”
Both spoke of Paraco’s founding family, the Armentanos of Westchester County, in similarly fond terms. “We always had these kinds of discussions, about what we could do to do more for our community, more for our employees, and more for our companies,” Davenport continued. “The way it turned out it’s a three-way win.”
“We made certain no one would lose a job,” said Motzkin. “We’re actually hiring more drivers, mechanics and others now.”
Officially, he added, Paraco remains the parent of Kosco, which is now in a joint venture with Heritage.
Included in all that Facebook chatter of recent weeks were many threats to shift fuel companies. There was talk of never being able to get anyone on the line. There were also worries that there could be other cold snaps this winter.
What were Motzkin and Davenport seeing when they looked at the weather patterns? “I spend an inordinate amount of time using different weather services to look at trends,” replied Davenport. “There are times Barry gets a little annoyed with me always being the weather guy. But I note how in our business everyone has to understand the date.”
“As far as I’m concerned, it’s winter like we remember it,” added Motzkin.
“Six more weeks? That’ll cost you,” joked Davenport. “We’ve got another ten or 15 days of relief now, but expect it to get real cold again in February.”
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