A Dead River Company fuel truck is pictured in Brewer on Jan. 30, 2014. Credit: Gabor Degre / BDN

A family-owned fuel company with deep Maine roots sold to a private equity firm this spring, reflecting a national trend of investors seeking short-term profits in rising fossil fuel prices.

The 112-year-old Dead River Co. of South Portland sold for an undisclosed amount to Redwood Capital Investments of Maryland, which has bought or invested in more than a dozen propane and fuel companies across the nation since 2015. Redwood Capital did not respond immediately to a request for comment.

Redwood Capital’s purchase of Dead River, which claims to be the largest heating service provider in northern New England, could bring it a premium. Maine still relies heavily on fossil fuels for heat, but the state plans to make a major shift to renewable energy in a decade.  

In Maine, 3 in 5 households use fuel oil as their primary heat source. That is a larger share than any other state, with only 9 percent of U.S. households mostly using oil, according to federal Energy Information Administration data.

Tight energy supplies are driving up prices globally as oil and gas producers remain concerned about a potential price drop similar to the one early in the pandemic, experts said. The energy administration’s  winter fuels outlook estimates that U.S. households using heating oil could spend anywhere from 30 percent to 59 percent more than last winter, depending on temperatures. Propane users could spend from 29 percent to 94 percent more.

The trends benefit Redwood Capital and other private equity firms, which together have invested $1.1 trillion into the energy sector since 2010. Most of that was in fossil fuel companies, with only 12 percent in renewable energy, according to PitchBook, which tracks investment, and a new analysis by the nonprofit Private Equity Stakeholder Project.

That investment trend comes at a time when Maine and the country are taking actions to reduce fossil fuels in the face of climate change. Democratic Gov. Janet Mills’ climate action plan aims to reach 80 percent renewable energy statewide by 2030.

The state became the first in the nation in June to pass a law requiring sale of state fossil fuel assets. At the time, the head of the Maine Public Employees Retirement System told Reuters that the $17.6 billion system had about $1.3 billion invested in fossil fuel exposure, and about two-thirds of the investments in oil and gas companies and utilities are through private funds.

The Private Equity Stakeholder Project is pushing for more disclosures in private equity deals, which typically are kept quiet. Those firms typically focus on extracting as much profit as possible out of any investment quickly, said Alyssa Giachino, the project’s research director on climate.

“Given the science and the global conversation around the climate crisis, we’re in a moment where every actor needs to do their part,” she said.

It is not clear how the new private equity owner might affect Dead River, which is known for its attentive customer service after being owned by the same family since 1909. Dead River has acquired more than 50 regional heating fuel companies over the past 25 years, including its most recent purchase in September of family-run Giroux Energy Solutions of Portland.

Dead River started as a forestry products company and is named after a river that flows through its former forest lands in western Maine. It entered the petroleum business in the mid-1930s and established a headquarters in Bangor. It sold all of its forest products business by 1987, and shifted its focus to petroleum products’ distribution, commercial real estate development and convenience store management. Now based in South Portland, it conducts its petroleum business in Maine, New Hampshire, Vermont and western Massachusetts.

The company sought a buyer after “assessing the realities of three living generations of owners with diverse interests and priorities, spread across different parts of the country,” Lisa Morrissette, a company spokesperson, said.

“The family decided to look for a buyer with whom they could trust the future of the company, someone who aligned with their values,” she said.