Peterson’s Oil & The “Accident” That Wasn’t
For at least seven years, a New England heating oil company sold its customers a watered-down fuel blend that destroyed their furnaces, let their homes go cold, and charged them full price for a product that didn’t exist.
This is the story of Peterson’s Oil Service, Inc., a Massachusetts heating fuel company that operated under the names Cleghorn Oil by Peterson and Peterson Oil, and the quiet, multi-year decision its leadership made to fill customer tanks with a biodiesel cocktail that had no business being there.
It is also the story of what happens when even the people who are supposed to have your back, specifically the company’s own insurers, try to find a legal trapdoor out of the mess.
Seven Years of Fake Heating Oil, One Winter at a Time
Under industry standards, a fuel blend may contain a maximum of 5% biodiesel and still legally qualify as ordinary heating oil. Peterson’s sold fuel containing more than 5% biodiesel in every single gallon delivered between 2012 and 2019. Between 2015 and 2018, the average biodiesel content in their product hit 35%. That is seven times the legal threshold, sold at the price of the real thing.
Biodiesel-heavy blends behave differently at low temperatures. They gel. They clog filters. They are chemically incompatible with conventional heating systems designed to run on standard No. 2 heating oil. Peterson’s customers were not told any of this. They signed up for heating oil. They received something else entirely.
The customers who brought the class action lawsuit reported paying more than the fuel was worth, suffering repeated, unpredictable losses of heat, and sustaining permanent damage to their furnaces and heating equipment. Some of those customers include private homeowners. Others include institutions like Congregation Beth Israel of Worcester, a religious community that trusted a local vendor to keep their building warm.
They Knew. They Kept Selling.
The customer-plaintiffs allege that Peterson’s received numerous complaints from customers reporting heating system failures in 2018. The company did not immediately stop. It did not immediately warn. The court record shows Peterson’s continued to distribute the blended fuel after those complaints came in, and only began disclosing the biodiesel content of its products in early 2019.
That gap, between knowing customers were reporting equipment failures and choosing to keep delivering the same product, is the core of the fraud claim customers brought under Massachusetts law. It is also the most damning fact in this entire legal record.
The Non-Financial Ledger: What Money Can’t Fix
There is a specific, physical cruelty to having your furnace fail in a Massachusetts winter. New England cold is not a metaphor. Temperatures drop well below freezing. Pipes burst. Elderly people get sick. Children sleep in their coats. When a heating system goes down, it does not go down conveniently, in September, with weeks to spare. It goes down on a Tuesday night in January when the temperature is 12 degrees and the earliest a repair technician can arrive is Thursday.
That is the material reality for the customer-plaintiffs in this case. They paid for a service. They believed they had that service. And then, without warning, the heat stopped. The court record describes customers experiencing “repeated losses of heat.” The word “repeated” is doing enormous work in that sentence. This was not a one-time outage. This was a pattern. Customers called for repairs, paid for them, and then watched their systems fail again because the same compromised fuel kept flowing into the same damaged equipment.
The Damage Was Permanent. The Deception Was Not a Mistake.
The lawsuit does not allege a batch gone wrong or a supply chain hiccup. The court record describes a deliberate, multi-year decision by Peterson’s to alter the chemical composition of the product it sold while continuing to bill customers for standard heating oil. The company’s president made an intentional choice to change the fuel blend. That is established in the record. The legal debate in this case is not about whether Peterson’s did something intentional; it is about whether Peterson’s meant for the furnaces to break. That distinction tells you everything about how the law thinks about corporate harm versus how the rest of us do.
Among the customer-plaintiffs listed by name in the court record is Congregation Beth Israel of Worcester. A religious congregation. A community institution that holds services, hosts gatherings, provides space for the rituals of birth and mourning and celebration. The idea that this organization, alongside families like the Marandinos, the Carrigans, the Fredas, the Harts, and Torre Mastroianni, had their heat stripped away through a years-long deception, and then had to fight in court just to be taken seriously, represents a kind of institutional betrayal that settlement checks cannot fully address.
The Insurance Numbers: What Was on the Line
When the insurers tried to walk away, the stakes became clear. The primary insurance policies carried a $1 million per occurrence limit and a $2 million general aggregate limit per year. The umbrella policies carried $15 million per occurrence and in aggregate. The insurers tried to cap their exposure at just $250,000 per policy year by arguing the “failure to supply” clause applied. That is a difference of $14.75 million per year in potential coverage, per umbrella policy alone.
Five successive one-year primary policies ran from July 1, 2011 to July 1, 2016. Five corresponding umbrella policies ran over the same period. The insurers’ attempt to invoke the $250,000 cap was not just a legal technicality. It was a move to slash potential liability by 98.3% per year, per primary policy, relative to the per-occurrence limit, and to eliminate umbrella coverage entirely.
Legal Receipts: Their Own Words on the Stand
These are direct, verbatim passages from the appellate court record in United States Fire Insurance Company and The North River Insurance Company v. Peterson’s Oil Service, Inc., et al., First Circuit Court of Appeals, No. 24-1671.
“Every gallon of fuel that Peterson’s supplied between 2012 and 2019 consisted of more than five percent biodiesel — the maximum amount of biodiesel a fuel blend may contain while still qualifying as ordinary heating oil under relevant industry standards — and contained an average of thirty-five percent biodiesel between 2015 and 2018.”
First Circuit Court of Appeals, No. 24-1671 — Background: The Underlying Litigation
“Peterson’s allegedly continued to distribute blended fuel even after receiving numerous complaints from customers reporting heating system failures in 2018, and only early in 2019 began disclosing the high level of biodiesel in its products.”
First Circuit Court of Appeals, No. 24-1671 — Background: The Underlying Litigation
“As a result, the customer-plaintiffs assert that they paid more for Peterson’s fuel than it was worth, suffered repeated losses of heat, and incurred permanent damage to their heating systems.”
First Circuit Court of Appeals, No. 24-1671 — Background: The Underlying Litigation
“The negligence count alleges that Peterson’s ‘knew or should have known’ that the biodiesel content in its fuel ‘would not efficiently heat [customers’] houses and businesses and could harm their furnaces’ and ‘also knew the risks [its] fuel posed to traditional heating equipment.'”
First Circuit Court of Appeals, No. 24-1671 — Analysis: Duty to Defend
“Had the Insurers intended to convey otherwise, they could have incorporated ‘adequate’ into an adjectival phrase describing the enumerated products by rephrasing the provision to cover a failure to ‘supply adequate gas, oil, electricity,’ etc. Their failure to do so means that it is possible that the at-issue provisions were intended to capture only Peterson’s failure to deliver an adequate amount of oil — a shortcoming not implicated by the customer-plaintiffs’ underlying complaint.”
First Circuit Court of Appeals, No. 24-1671 — Analysis: Failure to Supply
Societal Impact: The Ripple Effects Nobody Covered
Public Health: Cold Is a Medical Emergency
The court record describes customers experiencing “repeated losses of heat” in Massachusetts. This is a public health issue with teeth. The Centers for Disease Control recognizes hypothermia as a serious winter hazard, disproportionately affecting the elderly and young children. Customers who had no idea their fuel blend was defective, and who had no way to diagnose why their heat kept failing, were left cycling through repair calls, temporary heating solutions, and cold nights while Peterson’s continued delivering the same compromised product.
The permanent damage to heating systems is also a public health variable. A broken furnace during a repair cycle is not just an inconvenience. Families using space heaters as emergency replacements face elevated fire risks. Carbon monoxide exposure from malfunctioning heating equipment is a documented hazard. The cascading consequences of a company selling a product it “knew or should have known” would damage heating equipment do not stop at a broken heat exchanger.
Congregation Beth Israel of Worcester is one of the named plaintiffs. Religious and community institutions in New England frequently serve vulnerable populations, including elderly members and families in need of gathering spaces. Heat failure in a congregation hall is a safety failure for every member of that community who relied on that space through a Massachusetts winter.
Economic Inequality: The People Who Can’t Absorb This
Heating oil customers in Massachusetts are not choosing a luxury service. They are paying for survival infrastructure in a climate that demands it. The class action complaint covers a span of seven years, from 2012 to 2019. That means some households paid above-market prices for substandard fuel for the better part of a decade while also absorbing the cost of repeated furnace repairs, service calls, and eventual equipment replacement.
The court record describes customers paying “more for Peterson’s fuel than it was worth.” That overcharge, compounded over years of deliveries, represents real money taken from real household budgets. The people who can least afford emergency furnace repairs are the same people who typically rely on home heating oil rather than gas or electric systems. These are homeowners, small business operators, and community institutions in working-class and middle-class New England neighborhoods, not corporate campus facilities managers with maintenance departments.
The legal fight itself demonstrates the economic power differential at play. Peterson’s had two insurance companies defending it in a federal appeals court case. The customer-plaintiffs, the ordinary people on the other side, had to intervene as a putative class, meaning they collectively organized to assert their right to be represented in a coverage dispute that would directly determine whether their case had legal backing behind it. When corporations fight over who pays for corporate harm, the people who actually suffered that harm have to show up just to make sure they are not forgotten in the room.
The “Cost of a Life” Metric: Crunching What They Tried to Cap
The insurers’ proposed $250,000 cap ($250,000 is roughly what 50 American workers take home after taxes in a full year) would have covered almost nothing for a class of customers who lost heat repeatedly, paid overcharges for years, and suffered permanent equipment damage across hundreds of homes and institutions.
What Now? The Fight Isn’t Over.
The First Circuit’s ruling only settles one question: Peterson’s insurers must continue defending the company in the underlying Massachusetts class action. The question of whether Peterson’s will actually be forced to pay, and how much, remains open. The underlying state court class action is still active.
Corporate Roles Named in the Record
- Peterson’s Oil Service, Inc. (d/b/a Cleghorn Oil by Peterson and d/b/a Peterson Oil) — the corporate defendant
- Howard Wood Peterson, Jr. — company officer, named defendant; his deposition testimony about the intentional decision to change the fuel blend was central to the legal proceedings
- Kristen Peterson Halus — company officer, named defendant
- Sharon Peterson — company officer, named defendant
Regulatory Bodies With Jurisdiction Over This Type of Conduct
- Massachusetts Attorney General’s Office — consumer protection enforcement under state law, including M.G.L. Chapter 93A
- Massachusetts Department of Public Utilities — regulates heating fuel dealers operating in the Commonwealth
- Federal Trade Commission (FTC) — consumer fraud and deceptive trade practices at the federal level
- Environmental Protection Agency (EPA) — biodiesel fuel standards and labeling compliance
- Consumer Financial Protection Bureau (CFPB) — if any financing or service contracts were structured through consumer credit products
The source document for this investigation is attached below.
not that it’s extremely relevant to the story, but did anyone else notice that one of the people getting sued is literally named “Israel”? lol Beth Israel.
Explore by category
Product Safety Violations
When companies sell dangerous goods, consumers pay the price.
View Cases →Financial Fraud & Corruption
Lies, scams, and executive impunity that distort markets.
View Cases →
