JEFFERSON -- Sheridan Bond always prepaid his heating oil bill to get a discount.

The owner of Bond Brothers Lumber in Jefferson and the town's fire chief started doing that a decade ago when fuel prices began to climb.

After watching oil prices go through the roof over the summer, Bond decided to take it a step further. He formed a small co-op with a group of employees, neighbors, his lumberyard and the Jefferson fire station.

The group will be paying $3.30 a gallon for heating oil this winter.

"About 10 years ago, when oil started jumping up 50 cents then 70 and on up to $1.07 a gallon, it was quite an increase affecting the bottom line on not only my business but household," Bond said Thursday. "And now, (with the price increases) last year it's like having an additional mortgage payment. So I started inquiring."

According to Jamie Py, president of the Maine Oil Dealers Association, co-ops may not work for everybody. Many oil companies avoid co-ops because they don't really benefit from those bulk buys.

He said it is up to the oil companies whether there are efficiencies to be gained by providing a different pay structure to a co-op rather than on an individual basis.

He said there are many variables, including geographical and administrative ones.

"It's really a business decision between the dealers and whoever this group represents," Py said. "And whether or not there are some geographical benefits to the dealer in making deliveries and collecting the money. Some don't participate because it doesn't fit their business plan."

For example, a perfect situation would be a co-op of households on a cul-de-sac with once -a-month deliveries of an agreed amount of fuel oil and cash payments prior to delivery.

People in Bond's co-op must have approved credit and pay within 10 days of receiving their bills.

Marc Lacasse, president of Augusta Fuel Company, said fuel oil co-ops don't always work out.

"There's a lot of reasons for that," Lacasse said. "Customers, for the most part, are happy with their existing vendors. They're comfortable with the personnel they deal with and have service contracts that have a lot of value in added services that, if you decide to become part of a group-buying situation, you may not get."

Bond said his group locked into a price for heating oil, and even though as of Thursday, the price of fuel oil in southern Maine dropped to around $2.83 a gallon, Bond said their $3.30 price will end up being a good one.

According to MaineOil.com, the average price for heating oil in the Augusta and Waterville area is $3.598 on Thursday.

He suspects the drop in price is temporary, especially with the national financial crisis.

"We had the options to playing the market, but we chose to go with the fixed price so we can plan our budgets," Bond said.

Mechele Cooper -- 623-3811, Ext. 408

mcooper@centralmaine.com