BJ's Wholesale Club fires up heating oil biz

BJ's Wholesale Club has started selling home heating oil at its five Long Island stores, adding a major retailer to the area's highly fragmented fuel oil market.

The Natick, Mass.-based firm began selling oil last week out of its stores in East Setauket, Hauppauge, Westbury, Farmingdale and Freeport. It also launched the program at three stores in Brooklyn and Queens, bringing heating oil to 41 of its 145 stores, or clubs.

BJ's has set up a members heating oil advantage program through a partnership with PriceEnergy, a subsidiary of Rockaway, N.J.-based Able Energy.

BJ's, which charges its members $40 a year, said PriceEnergy works with three local dealers to provide the oil, though it declined to identify them.

BJ's first launched its fuel oil sales in portions of New England as a test in late 2001 and then moved into the Mid-Atlantic in late 2002.

BJ's was selling heating oil at its Long Island stores for $1.039 a gallon as of Aug. 22. The oil can be ordered over the phone or on the Web at www.priceenergy.com.

Competing retail clubs such as Costco have stayed out of the heating oil market. But BJ's said it hopes to make money and increase membership through the program.

The company had sales of $5.7 billion last year. It doesn't reveal membership numbers.

Why Long Island? asked BJ's spokeswoman Kim Walker Borst. The program's been successful in areas we started with. We're trying to move the program to other heating oil markets.

Able said it's already getting a steady stream of calls and sales as a result of in-store marketing materials.

The phones are humming, said Tim Harrington, CEO of Able. We're placing orders.

A wide range of oil companies do business on Long Island, including Meenan Oil, Slomins and Petro. None of those returned phone calls seeking comment about BJ's entrance into the local heating oil market.

But the Hauppauge-based Oil Heat Institute of Long Island, a trade association for suppliers of oil and servicers of oil burners, said it isn't difficult to understand why a company seeking to sell oil would target Long Island.

Roughly 70 percent of homes on Long Island use oil heat, according to the institute's CEO, Kevin Rooney. Hicksville-based KeySpan Corp. said about 35 percent use gas.

This is the densest oil marketing region in the country, said Rooney.

The vast majority of those homeowners buy their oil from a company they know, that they've deal with for many years, he added. This isn't like buying a bar of soap or buying gasoline.

PriceEnergy Chief Operating Officer John Vrabel said that customers can obtain service from other firms and still save substantially on their bill.

BJ's already sells gasoline for vehicles at its Freeport and Farmingdale units, two locations where lines have extended into the street in recent days as customers have sought refuge from skyrocketing gas prices.

Our gas program is doing very well, said Borst.