Oct. 4th, 2006

Dear Pre-paid oil customer;

This letter is in response to the recent price drops in the heating oil market. With the news media blitz, including the Channel 9 story last night, the phone and e-mail systems have been quite active to say the least. So I felt I needed to clarify our position with respect to your pre-paid plan.

I wish that I could say yes, I'd be happy to rebate any difference in the price per gallon. Unfortunately, I can not. In good faith, I purchased my customers over I million gallons of oil for delivery this upcoming season. I was very clear about the fact that you were buying a fixed price contract without downside protection. Consequently, if the price falls, there would be no adjustment in price. And while I can certainly empathize with you over the recent drop in prices, there is not much I can do to provide any relief. My suppliers have no intention of letting me out of those contracts or offering any rebates. That would certainly make my life easier, but it's not going to happen.

I do believe that prices will rise again after the election and the onset of winter. The administration has taken a lot of heat over gas and oil prices, I hope it is only a coincidence that prices are falling prior to re- election. It would be very disconcerting to find out that the major oil companies do indeed succumb to governmental pressure. That would be a very slippery path. It's also important to know that billions of dollars were lost recently in hedge funds that trade heating oil futures on the N.Y. Mercantile exchange. Thankfully that should shake out the day traders and hopefully lead to a less volatile and more fundamental approach to the price of heating oil.

I'd also like to tell you that if you hear of a company that will let people out of their contract for a percentage, that tells me one thing. They did not purchase all of the oil that their customers bought. That is such a dangerous thing to do. In the past few years you've no doubt seen the stories of bankrupt dealers, fleeing executives, and rampant lawsuits resulting from not covering the contracts and prices then spiked dramatically. I'm a small family business owner and I can't afford to take chances like that. I know most of my customers on a first name basis and could never jeopardize their loyalty by trying to outguess the markets. It can't be done. So we will continue to lock in gallons and cover our obligations, and hope that the future brings more sanity to the heating oil markets.

Sincerely,

Jeffrey S. Peters
President
A.W. Peters, Inc.