LOWER TOWNSHIP — Heating oil remains a popular way to keep homes warm in South Jersey, despite inroads by natural gas companies.

One local supplier, McPherson’s Fuel Service based in Lower Township, sees a promising future for heating oil, despite sharp price fluctuations and a growing discrepancy in pricing between the two fuels.

About 6 percent of U.S. homes are heated with fuel oil compared with 20 percent in 1980. But 80 percent of these homes are found in the Northeast.

“Even when they run a gas line to a new area, not everyone switches,” said owner Chuck McPherson, of Lower Township.

His grandfather, Reeves McPherson, started the business in 1938, making his first deliveries the day his son Charles — who would become Chuck’s father — was born.

“The police had to come get him to tell him my grandmother gave birth to his son,” he said.

McPherson had a similarly memorable start in 1973, the year before he joined his grandfather’s company. Oil cost less than 29 cents per gallon at the time.

“With the first oil embargo, my grandfather came home from work and said, ‘That’s it. We’re out of business,’” McPherson recalled. “‘When you go to work, oil will be 50 cents per gallon. The American public will not pay it.’ I was thinking, ‘What am I going to do now?’”

But the embargo did not last, and eventually the price dropped and lines at the gas pumps thinned.

McPherson’s delivers fuel oil in Atlantic, Cape May and Cumberland counties.

McPherson took over the business from his grandfather in 1981.

Now the biggest threat to small fuel-oil companies is competition from other fuels, particularly natural gas.

South Jersey Gas added 6,000 customers in 2012 for 357,306 in South Jersey, its highest level of customer growth since 2006. Most of these new customers, or 5,200, converted from other fuels. The company expects to convert 5,500 customers in 2013.

And natural gas prices continue to drop while heating oil is on the rise.

The average residential heating-oil customer has a tank that holds 275 gallons, which at today’s price of $3.69 would cost more than $1,000 to fill. Cold winters often require multiple refills.

“The biggest problem we have now is a lot of our refineries are closing. That’s pushing the price up,” McPherson said. But he remains upbeat about the future of heating oil in South Jersey. It is uneconomical to extend natural gas lines to many rural parts of the state. And some residents can’t afford the thousands of dollars needed to convert their furnaces, he said.

“I think we’re all going to regroup. There might be a few companies that merge. I don’t see it ever going away,” he said.

For now, McPherson said his customer base is loyal. He delivers between 175,000 and 500,000 gallons of fuel each winter. When a furnace breaks, he offers a referral to a trusted business partner, a repair company called the Service Department, based in Middle Township.

“I think our price plays a role, but service is important. Customers want to know on that cold nasty day, someone will be there to fix the heater or deliver the oil,” he said. “After 75 years, you have a track record.”

McPherson bought out an Ocean City fuel-oil company in 2002 and absorbed its customers into his delivery route.

In the winter, he spends long days driving from house to house in one of his company’s two 3,000-gallon delivery trucks. He gets his oil from a Cumberland County distributor. The summer is the slow season, when he can relax between occasional stops to refill tanks at campgrounds or hotels, he said.

“That’s one good thing. I work a backward season compared to other people. I’m done in June,” he said.

And working for himself gives him the flexibility to volunteer for the West Cape May Volunteer Fire Company, where he is chief.

But each winter he has to work even on — or especially on — the iciest, snowiest days.

“The coldest, nastiest day of the year is my busiest,” he said. “When everyone else is throwing another log on the fire, I’m doing a 14-hour day.”

His wife, Barbara, answers the phones, schedules the service and takes care of billing. His brother, Michael McPherson, of Lower Township, helps drive on days that are especially busy or when he gets sick.

“We’re like the last mom-and-pop oil business left around here,” Chuck McPherson said.

Contact Michael Miller:

609-272-7217, MMiller@pressofac.com