Get rid of him.
You could take over responsibility of the oil and raise his rent accordingly but this is only a stop gap solution as he will default on his rent payment at some point and you will be forced to evict.
You have grounds to evict now so I would tell him he has to go and release him from his lease.
Next time you should screen your applicants properly. He obviously does not qualify income wise.
For future reference you never take money out of a tenants security deposit if they still occupy the property. Never touch a deposit till they leave. You bill tenants directly for all tenant caused expenses.
I agree with @Thomas S. , things are only likely to get worse from here. At this point any proposed resolution is likely to fail (billing him directly for repairs, filling the tank yourself then adding it to his rent) because the bottom line is he doesn't have the money. Not to mention that if he can't fill his oil tank it's only a matter of time before he has a minor unexpected expense that leaves him short on rent money, then you'll be on the hook for much larger losses. stop the bleeding now and consider yourself that much more prepared to avoid this situation in the future.
Well if he is grabbing oil in 5 gallon jugs , he is getting diesel , which is fine , its the same as # 2 heating oil. Your next problem will be sediment and or water in the oil filter . Teach the guy how to bleed the system , it isnt hard
While this tenancy may be doomed, January is not the best time to re-rent. Do a little investigating and see if any social service agencies will fill his tank as a stop gap measure. He will need to apply for himself. St. Vincent de Paul's has helped my tenants in the past.
"January is not the best time to re-rent"
Even worse time to have a non paying freeloading tenant run out of oil, freeze the pipes and have to evict. Better a vacancy than a repair and eviction.
Thomas S, I purchased the house with this tenant in there. I definitely wound'nt have given him an apartment with his income and a few other things. I got a great deal on the duplex so it was worth it. Also, this tenant is paying well below market rent. His lease expires in June so if I hit them with a 150$ a month rent increase, he'll probably go searching for another place. I try not to mix business with emotions but he and his wife are really nice people. It's just that they are poor and struggle with their bills. I don't want to throw them out in the street. They are way below market with this rent and i'm afraid they will not find anything at the rate they are looking. I'd like to help them somehow but i'm trying to run a business, not a charity org. I guess I have a good heart unlike some of you money sucking sponges...lol.
Fortunately for me I never allow my feelings to interfere with business decisions. I suck up maximum returns on my investment. Tenants have options I do not.
It sounds like you are supplementing their rent already so why not fill the oil tank at your expense to protect your property then give them the boot as soon as your costs over power your emotions.
I would say never mix emotions with running your business. Our job is not to be a buddy to our tenants. Our job is to present a habitable, well maintained property for our tenants. Their job is to pay. I have some tenants who are not sweethearts, but they pay consistently.
Another quick comment...another poster said you should try to arrange with social service agencies to get him help. I would advise strongly against that. You, as an investor, and landlord, have a full plate. Let the tenants find the help.
Fill the tank, spread the cost of the next few months of rent, and then don't renew in June.