Pre-buy problems: Buyer beware, for now
Fred Fuller Oil, one of New Hampshire’s largest home heating oil companies, missed numerous oil deliveries in December, and that had two consequences: 1) Some customers left, and 2) the New Hampshire House of Representatives revived a bill to further regulate pre-buy oil contracts. The first effect is likely to be more long-lasting.
As House Bill 566 has percolated for years, legislators working on it have realized that there was no easy way to safeguard pre-buy oil payments. Typically legislators insist on “doing something” even if that something is purely symbolic or even makes worse the problem they are trying to solve. With HB 566, the story is different.
The bill at first would have required oil companies to put pre-buy money into escrow accounts. But that would put many small companies out of business, and banks objected to handling the accounts. Legislators considered requiring oil companies to register with the state, but that would not solve the problem, and the state hasn’t the staff to oversee the companies. It is not clear that either solution would have prevented Fred Fuller’s recent delivery problems, which were not restricted to pre-buy customers.
The Commerce and Consumer Affairs Committee has voted 19-1 to kill the bill because the committee was unable “to find a way to protect consumers from these catastrophic business failures.” How refreshing to see legislators acknowledge the limits of their powers rather than advocate passing a symbolic but ineffective or even damaging law.