Welsh Oil Thefts Up 500%
Heating oil tank locks can help prevent thieves syphoning oil. Thefts of heating oil tanks have spiked in rural areas of the UK. (image: cusworth.net)
Organized criminal groups are tailing heating oil delivery trucks and casing rural British properties before returning at night to steal the “liquid gold”.
A spike in the price of fuel oil across the UK has contributed to a 500 percent increase in the number of Welsh heating oil thefts in the last five years, the BBC reports. There is now the equivalent of one heating oil theft every day. The numbers jumped from 68 in 2007 to 364 last year, according to statistics released under the Freedom of Information Act.
Insurance specialists say the rise in heating oil thefts is closely linked to the commodity’s volatile price. When prices spike, heating oil becomes more attractive to criminals. Heating oil thefts are much more common in the UK than here in the US, though instances of American thieves targeting the fuel have increased in recent years as prices climbed.
The cost of oil has risen sharply in the UK this winter, when temperatures plummeted to 30-year lows. Nicola Whittaker, rural affairs specialist from insurance firm NFU Mutual, said there had been a noticeable increase in claims from farmers and rural homeowners.
Just before Christmas, a Welsh property near Welshpool was hit. One-thousand litres (264 gallons) of heating oil worth £700 ($1100) was siphoned from a tank. Many rural homes rely on heating oil because they are not connected to gas mains supply. Their tanks are often visible and accessible from roads for ease of delivery, making them more susceptible to thieves.
“It did really start to increase towards the end of 2010 because the price of oil increased by about 70 percent,” Whittaker said. “That trend continued into 2011. We were seeing a lot of oil going missing from farms and homes in rural areas.”
While more businesses were generally targeted in oil thefts across the UK, homes were more likely to be hit in Wales.
“Heating oil is a lucrative commodity for thieves when the market value peaks; as such we are advising people to treat their supply like liquid gold.”
Most of the crimes are thought to be carried out by organised criminal gangs, who check out properties in advance, sometimes following delivery tankers to identify targets, then return at night to steal the oil.
Police Tips To Prevent Heating Oil Thefts:
* Fit a secure tank lock.
* Check oil levels frequently.
* Arrange smaller but more frequent oil deliveries.
* Install movement sensor security lighting around the tank.
* Screen tank from view with shrubs or fencing.
* Install lockable access gates, and erect lockable fencing.
* Fit an alarm system which warns if oil levels drops suddenly.
* Be vigilant following a delivery.
Senator Seeks Hearing on Northeast Refineries
Senator Bob Casey is campaigning for a senate hearing into what effect the closures of three Northeast refineries will have on the region's energy consumers. (image: pennlive.com)
Three US lawmakers are calling for a high-level hearing into refinery closures in the Northeast, which are tipped to cause price hikes for millions of heating oil users, Reuters reports. The call comes as hundreds protest in Pennsylvania against the refineries being shut down, marching in numbers on Saturday on Gov Tom Corbett’s office.
Senator Bob Casey (D-Penn) asked on Friday for a Senate hearing to investigate job losses and potential shortages of refined products should three Philadelphia-area refineries be permanently idled. Casey, along with US Representatives Pat Meehan (R-Penn.) and Pennsylvania state Representative Thaddeus Kirkland met with United Steelworkers (USW) union presidents from the three refineries to discuss their concerns.
In a letter to Jeff Bingaman (D-NM), chairman of the US Senate Committee on Energy and Natural Resources, Casey said he was concerned about the 6000 jobs being lost. But he was also alarmed at the possibility of price spikes for gasoline and particularly heating oil up and down the Northeastern US.
“If no buyer is found and these facilities were to permanently close, the loss of our refining capacity on the east coast will have a substantial ripple effect across the nation’s economy.”
ConocoPhillips shut down its 185,000 bpd refinery in Trainer in late September. Union officials believe the refinery will be razed if no buyer is found by the end of March. Sunoco’s 335,000 barrel per day Philadelphia refinery is still operating, but is scheduled to close at the end of June if it isn’t sold. Sunoco also owns the 178,000 bpd refinery in Marcus Hook, which was idled late last year.
The three refineries are within a 12-mile radius of each other in southern Pennsylvania. They collectively account for over half the Northeast’s refining capacity. A December study by the US Energy Information Administration warned the closures could result in spot shortages of refined petroleum products, causing supply disruptions and spiking prices, particularly in the Northeastern heating oil market.
The Northeast is the nation’s biggest heating oil user. Around 6 million of the region’s homes rely on heating oil as their primary source of warmth. Three Northeast lawmakers have already written to Energy Secretary Steven Chu calling for the Northeast heating oil reserve to be boosted to two million barrels as a safeguard and have asked the Federal Trade Commission to investigate the refinery closures on behalf of energy consumers.
The USW union has also warned idling the refiners could increase the nation’s reliance on foreign oil imports, leaving the US at the mercy of volatile international oil markets and geopolitical developments like the Libyan conflict and worsening standoff with Iran.
Jim Savage, the Philadelphia refinery union president, said union officials had asked the legislators to step in and show some leadership, after pleas to other local legislators went unanswered.
“A lot of people thought this was end of the process. There is still a lot of fighting left,” he said.
Heating Oil Expenditure to Hit New Record
Mild temperatures have tempered heating oil demand but high prices mean residential fuel oil expenditure is tipped to hit record highs this winter. (image: zimbio.com)
Despite much of the country experiencing its fourth warmest winter on record, residential heating oil expenditure is still tipped to hit record highs this winter, giving little reprieve to struggling homeowners.
It its weekly petroleum report, the US Energy Information Administration said Thursday the average household is forecast to spend $2326 heating their home with fuel oil this winter. That’s slightly higher than the previous record high - $2300 posted last winter.
“The primary driver for this winter’s high heating oil expenditures has been heating oil prices, not consumption,” the EIA report says.
The heating season runs from October through March. At the start of winter, the EIA predicted the average home would spend a record $2500 on winter heating oil costs. But as the mild winter progressed and domestic heating oil use plateaued, officials revised the average expenditure figure down by $110 in January and lower still in its latest forecast.
“While unseasonably warm weather has continued (January 2012 was about 19 percent warmer-than-normal in the Northeast), winter heating oil expenditures for the average household are nevertheless likely to remain the highest on record due to continued seasonal record high heating oil prices,” the EIA report says.
About 6 percent of US homes rely on heating oil as their primary source of warmth, with about 80 percent of them in the Northeast.
The EIA says two main factors drive heating oil expenditure – temperature and price. And while temperatures have waned, heating oil is still commanding strong prices on world commodity markets for a number of reasons.
Volatile international crude oil prices play a big part. The current Iranian crisis over the Middle Eastern nation’s apparent bid for nuclear weapons has seen oil prices strengthen in recent months as sanctions spark fears of supply shortages. This has an immediate effect on the price of any refined petroleum product such as gasoline, diesel or heating oil.
Fears the closure of three Philadelphia refineries will lead to heating oil shortages have also sent fuel oil prices heading north and sparked calls for a congressional hearing into the potential effect on energy consumers.
But strong international demand for distillate fuels, which include heating oil and diesel, is also singled out by the EIA.
“Although heating oil has been declining as a share of total distillate consumption, global diesel fuel demand has been growing and will likely continue to grow, assuming strong economic activity in developing countries such as China, India, and Brazil,” the report says. “EIA’s expectation of increasing global petroleum demand, especially transportation fuels, over the next few years results not only in high world oil prices in general, but also in rising distillate prices in particular.”
The report finishes with further gloom for heating oil customers. This month’s Short Term Energy Outlook predicts average retail heating oil prices next winter will hit $3.97 a gallon –15 cents a gallon higher than the current projection for this winter.
Heating Oil Tale Moves US to Generosity
Maine heating oil dealer Ike Libby touched the nation's heart after delivering heating oil to an elderly couple who could not afford to pay. (image: wcsh6.com)
A newspaper story on a struggling heating oil dealer’s benevolence has sparked a national outpouring of generosity for cash-strapped oil heat customers, the Huffington Post reports.
Ike Libby runs Hometown Energy, a fuel oil delivery business in Dixfield, Maine. Like countless heating oil dealers around the country, Libby is no stranger to the hardship faced by many of his customers and the difficulties they face paying winter fuel oil bills.
When pensioner Robert Hartford tried to hand over the title to his 16-year-old Lincoln Town Car in exchange for heating oil to prevent him and his disabled wife from freezing, Libby filled their tank without payment, rather than seeing the elderly couple go cold.
But he never expected the outpouring of generosity that would follow.
The story appeared on the front page of Saturday’s New York Times and appears to have struck a chord with readers across the country, many of whom immediately wanted to help.
On Monday morning, when Libby went to work, the cards, checks and credit card donations started rolling in. They now total more than $100,000 in cash to help heat impoverished customers’ homes, the Lewiston Sun Journal reports.
“I didn’t expect this to happen,” he said. “You can’t even put it into words. America’s got a heartbeat and we are hearing it.”
One of the letters read: “A donation to Hometown Energy. Good luck, thanks for caring.” It was a check for $5000.
“We struggle as a business,” Libby told WCSH. I’m getting some credit for this. [But] I’ve just been trying to do my job.”
An emotional Libby said he had set up a trust account for the money to make sure it goes to the people who need it most. Despite a near-record mild winter, heating oil prices remain stubbornly high on strong export demand, fears of supply disruptions from refinery closures and volatile world oil markets.
But those on low incomes also face cutbacks to the federal Low Income Heating Energy Assistance Program (LIHEAP), which has been slashed this year to reduce the federal deficit. The cuts mean Maine’s allowance alone has fallen from $56.5 million to $39.9 million, and has left thousands of people living in cold climates who depend on aid from the program struggling to keep up with heating oil expenses this winter.
Nevertheless, Libby has helped the Hartfords and many other Maine families struggling to stay warm by delivering oil to people he knew couldn’t afford their bills.
“I haven’t always looked out for the best interest of the business, but you know what this has been great.”
The Hartfords have just had their tank refilled. The cost came to $771.72. The receipt left on the door said it had been paid in full. Wilma Hartford, 71, said the outpouring of donations was unbelievable.
“It tells me there’s a lot of good people out there. Sometimes in this world we look at it and think this world is really going to pieces. Bad news everywhere. But this has lifted my spirits and I know there’s a few good people out there.”
Those interested in donating to the heating oil trust can contact Hometown Energy at (207) 562-8822 or mail checks to Hometown Energy at P.O. Box 485, Dixfield, ME 04224. Donations are also being accepted online via Hometown Energy’s website.
What’s Driving Heating Oil Prices?
Strong overseas demand for US heating oil exports from countries in Europe and South America is supplementing weak US winter demand and pushing residential prices higher. (image: londonhotelsoption.com)
Heating oil contracts ended last week at their highest level in 11 weeks, despite warmer than normal winter temperatures cutting into heating demand, Reuters reports.
Heating oil futures contracts, bought and sold by energy traders on world commodity markets, settled on Friday at $3.1144 a gallon, gaining 6.15 cents, or 2 percent for the day. It was the highest settlement since November 16. Heating oil contracts gained 4.4 percent for the week, or 1.43 percent, extending gains for the second consecutive week.
These movements dictate the price heating customers and dealers pay for their fuel. But the upward pressure on prices might have folks scratching their heads given mild winter temperatures across the US, particularly in the Northeast where millions of homes rely on heating oil as their primary source of warmth.
It’s true that temperatures have been much milder than in previous winters. In fact private forecaster MDA EarthSat says this US winter is the second mildest so far since 1950, running about 30 percent warmer than the 30-year average. For the next fortnight, temperatures in the Northeast are expected to average above normal, with daytime highs topping out in the upper 40s and 50s Fahrenheit, according to AccuWeather.
So what’s driving the ongoing price increases?
Well domestic heating oil stocks are falling and have done so now for six consecutive weeks, according to data released the Energy Information Administration. Last week reserve inventories declined 1.3 million barrels to end at 30.8 million barrels. That extended the deficit from a year ago to 8.3 million barrel, meaning we have less heating oil in storage than at the same time last year.
Total demand for distillates last week, of which heating oil is a major component, was 3.63 million barrels per day - though this was down 1.65 percent on year-ago levels, reflecting the warmer temperatures.
The relatively steady demand for heating oil is being firmed up by overseas demand, particularly from South American countries and Europe. Fuel oil exports are supplementing weak domestic heating oil usage and pushing prices higher.
Strong overseas demand for diesel is also at play. Diesel fuel is almost identical to heating oil in composition. But because there is no diesel future contract, investors often trade heating oil on commodity markets in diesel’s place. When demand for diesel is high, that again pushes up the price of heating oil.
Finally, the closure of several Philadelphia refineries has sparked warnings from the EIA of potential heating oil supply disruptions and accompanying price spikes, spooking investors and pushing prices higher again.
HeatingOil.com recommends homeowners have their heating oil furnaces regularly serviced to ensure they’re running at optimum efficiency, saving you money, and make sure homes are properly insulated to prevent heat loss.
Domestic Crude Oil Production Tipped to Rise
The economic downturn has seen less industry. That means lower oil demand as less trucks are needed to moves goods between states. (image: stltoday.com)
US oil production is on the rise and a federal energy agency predicts it will balloon by 20 percent over the next decade, hitting levels unseen since the 1990s, upi.com reports.
In its annual energy outlook for 2012, the US Energy Information Administration estimates that the nation’s daily crude oil production will reach 6.7 million barrels per day by 2020. Figures released by the agency show oil production increased from 5.1 million bpd in 2007 to 5.5 million bpd in 2010.
US Rep. Doc Hastings, R-Wash, chairman of the House Committee on Natural Resources, stated last month that oil and natural gas production on federal lands was down more than 40 percent compared to the early part of the century. However, EIA acting administrator Howard Gruenspecht said current projections indicated that domestic crude oil production was increasing while reliance on imported oil was on the decline.
“These projections reflect increased energy efficiency throughout the economy, updated assessments of energy technologies and domestic energy resources, the influence of evolving consumer preferences and projected slow economic growth,” he said.
The bullish oil production forecasts reflect the current boom in shale oil and gas reserves that lie beneath the US. Unconventional drilling techniques like hydraulic fracturing and horizontal drilling are helping energy companies tap hard to reach pockets of “tight oil” reserves trapped in shale rock. The EIA said further development of oil deposits in the Gulf of Mexico is also expected to bring domestic crude oil production to forecast levels.
Many commentators argue that a plentiful domestic supply of oil would give the US greater energy security and reduce our reliance on foreign oil imports from unstable nations in Africa and the Middle East, where geopolitical developments often spark volatile spikes in world oil prices. Heating oil prices are closely lined to the those of crude. Many heating oil customers are struggling with the high cost of fuel oil, despite a relatively mild winter heating season so far.
The United States’ reliance on foreign oil has been falling with the boom in local production. But, as indicated by Gruenspecht, greater fuel efficiency and economic factors are also at play. Requirements to make new vehicles more fuel efficient are helping curb the nation’s voracious appetite for gasoline. And many states have phased out heavier, dirty heating oil varieties and mandated ultra-low sulfur heating oil in its place. The cleaner-burning oil is more efficient and much more environmentally friendly.
Finally, the recession has eaten into oil demand. Less commerce means less industry and fewer trucks moving goods between states. Though there are signs the US economy is starting to rebound, economic growth is likely to remain weak, limiting oil demand in the world’s biggest oil-using nation.
No Compo for Fuel Oil Customers
Pre-paid heating oil contracts are a good way to lock in lower summer prices ahead of winter. But some customers have been left out of pocket when heating oil firms have gone out of business. (image: masslive.com)
The Pennsylvania attorney-general’s office is warning that thousands of customers who were cheated in a pre-paid heating oil scam are unlikely to be reimbursed.
Customers of A&B Fuel, whose advance heating fuel payments disappeared when the company’s owners skipped town, face little prospect of restitution, poconorecord.com reports.
A Wayne County court finalized the company’s bankruptcy in 2010, two years after owners Arthur and Beverly Baio of Gouldsboro filed for personal and corporate bankruptcy. Consumers filed millions of dollars in claims for prepaid heating oil and propane that went undelivered after the company suddenly stopped making fuel deliveries in December 2007. Thousands of customers who had pre-purchased winter oil and gas are thought to have been affected.
Complaints poured into the state attorney general’s office, which launched an investigation into A&B’s business practices. The state subsequently filed a lawsuit against the Baios for violating consumer protection laws. It accused them of deceptive business practices – knowingly accepting payment for a product or service they could not provide.
Though the couple filed for bankruptcy, putting the state’s case on hold, the bankruptcy court declared that the Baios were still responsible for $975,000 in debt. But Pennsylvania’s Senior Deputy Attorney-General J.P. McGowen this month wrote to cheated customers with claims against the company warning that no funds were available for restitution.
“I do caution, however, that the prospect of a significant recovery remains slight.”
The attorney general’s office had been unable to identify any assets that could be paid to creditors, including customers who were left without heat. The office would continue to monitor the Baios’ ongoing financial condition. If monies become available, the auditor-general would make a distribution to creditors, the letter said.
The case of A&B is sadly not an isolated one. With the global recession and volatile world oil prices, other heating oil firms have been caught short after taking money for advance oil delivery contracts which they later were unable to honor.
The situation has sparked warning about the danger of pre-paid heating oil contracts from the Maine attorney-general and attempts at tougher consumer protection legislation in New Hampshire. HeatingOil.com recommends customers compare heating oil dealers and study contracts before signing up to pre-paid oil agreements and make sure you only deal with reputable, licensed dealers.
Iranian Tensions Pressure Oil Prices
Growing tensions over Iran's nuclear program are escalating fears of global oil supply disruptions, putting upward pressure on the price of crude and heating oil. (image: moneytrendsresearch.com)
Fears are growing of global oil supply disruptions after Europe announced a ban on Iranian oil in response to the rogue nation’s nuclear program.
UN arms inspectors are carrying out inspections in Iran this week and the country’s leaders were scheduled to debate the ban yesterday in response to an EU embargo on Iranian crude, AP Business reports.
The embargo was signed off last week and is set to take effect by summer, prohibiting the purchase of Iranian oil by European Union countries. It aims to curb the Middle Eastern nation’s oil revenue as concerns grow among the international community that Iran is building a nuclear bomb.
Oil prices hovered around $100 a barrel today after the EU announcement. Iran has indicated it could blockade the Strait of Hormuz in the Persian Gulf if new sanctions were implemented targeting its lucrative oil exports.
The head of Iran’s national oil company warned Sunday that EU sanctions could push oil prices up to between $120 and $150 a barrel, washingtonpost.com reported.
About one-fifth of the world’s supply of oil is shipped through the strategic waterway. The US and other nations have said they will not tolerate an Iranian blockade. US, British and French warships regularly patrol the Gulf and naval activity in the region is stepping up as tensions rise.
Investors are growing increasingly worried that any Iranian oil ban could disrupt world oil supplies and push prices even higher. The threat to oil shipments over the blockade standoff is only increasing tensions and putting more pressure on oil markets.
The developments have direct implications for heating oil customers as the price of fuel oil is closely linked to that of crude. With winter heating demand kicking in and prices already high, the last thing homeowners need is another oil price spike.
EU countries account for about 18 percent of Iran’s oil exports. Analysts believe any shortfall in Europe could be made up by other countries. If Iran was forced to stop selling oil to Europe, it should find other takers in Asia. China is Iran’s biggest oil customer as it seeks to fuel its rapidly expanding industrial base and burgeoning construction sector.
New Law Requires Oil Heat System Upgrades
A new law in Massachusetts requires heating oil systems to have protective devices installed to prevent damaging oil spills. (image: freelance-zone.com)
A new law in Massachusetts requires every homeowner with an oil heating system to install safety measures to prevent damaging oil leaks.
The Oil Heating System Upgrade and Insurance Law came into effect on September 30 after earlier being pushed back by 14 months to give homeowners more time to comply. It requires homeowners with heating oil systems to install an oil safety valve or oil supply line with protective sleeve.
Massachusetts attorney Richard D. Vetstein explained the new law to boston.com. He said the cost was relatively minor – between $150 to $350, depending on the system.
“The required upgrade is to prevent leaks from tanks and pipes that connect to your furnace. The upgrade will reduce the risk of an oil leak, so by making a relatively small expenditure now, you can prevent a much greater expense in the future.”
Owners of 1- to 4-unit residences that are heated with oil are required to comply with the new law. Installation of the oil safety devices must be performed by licensed oil burner technicians. These technicians are employed by home heating oil delivery companies or are self-employed.
“It is important to note that heating oil systems installed on or after January 1, 1990 most likely are already in compliance because state fire codes implemented these requirements on new installations at that time.”
Vetstein pointed out that homeowners are exempt from taking the leak prevention steps if their oil burner is located above the oil storage tank and the entire oil supply line is connected to and above the top of the tank.
Homeowners whose heating oil systems are already in compliance are also exempt. A copy of the oil burner permit from the local fire department may be used to demonstrate compliance.
Heating oil spills can expose the home’s occupants to dangerous petroleum vapors. But a spill can also cause significant environmental damage and be financially costly to clean up. The Massachusetts Department of Environmental Protection estimates the average cost to clean up a heating oil leak is between $20,000 and $50,000.
“If the leak reaches the soil or groundwater beneath your house, then a cleanup must be performed to restore your property to state environmental standards,” Vetstein said. “Leaks that affect another property or impact drinking water supply wells can complicate the cleanup and increase the expense. Each year, several hundred Massachusetts families experience some kind of leak.”
The law also mandated insurance coverage for all heating systems compliant with the new regulations. The insurance requirement went into effect in 2010.
Obama Scuttles Keystone Pipeline
President Obama has declined TransCanada's application to build the controversial Keystone XL pipeline, arguing a looming deadline gave his administration insufficient time to weigh the project's effects. (image: blogspot.com)
President Barack Obama is under fire for scuttling plans for the controversial $7 billion Keystone XL pipeline as heating oil costs soar, foxbusiness.com reports.
The 1700-mile pipeline project would have carried 700,000 barrels of Canadian sands crude to Texas refineries each day. Proponents argued it would create thousands of jobs, reduce America’s reliance on foreign oil from unstable Middle Eastern countries and provide a secure and plentiful source of energy for US homes and businesses.
However opponents have protested against the potential environmental effects of a major pipeline spill on pristine natural environments across six states and the threat to millions of people’s drinking water.
In a decision released last week, President Obama rejected the TransCanada project application, a month out from a February 21 deadline for the federal government to make a final call whether the project was in the national interest.
“The rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment,” President Obama said in a statement.
The announcement “is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline” that prevented the fact-finding needed to approve the project.
However, TransCanada immediately indicated it would reapply in a bid to keep the project alive.
“While we are disappointed, TransCanada remains fully committed to the construction of Keystone XL,” TransCanada CEO Russ Girling said in a statement. “Plans are already underway on a number of fronts to largely maintain the construction schedule of the project.”
TransCanada said it planned to reapply for a permit and expected processing of the new application to be expedited, paving the way for an in-service date of late 2014.
“Until this pipeline is constructed, the US will continue to import millions of barrels of conflict oil from the Middle East and Venezuela and other foreign countries who do not share democratic values Canadians and Americans are privileged to have,” Girling said.
Heating oil dealers have been campaigning for the pipeline to proceed. They and their customers are battling spiraling heating oil prices, largely on the back of volatile world crude markets and heavy international demand for distillate fuel.
New England Fuel Institute president Michael Trunzo said late last year he supported the pipeline as a means of securing reliable energy supply for heating oil customers in the Northeast and creating jobs for US workers.
Republicans seized on President Obama’s decision.
“By declaring that the Keystone pipeline is not in the ‘national interest,’ the President demonstrates a lack of seriousness about bringing down unemployment, restoring economic growth, and achieving energy independence,” GOP presidential frontrunner Mitt Romney said in a statement.
TransCanada and other supporters of Keystone have said the project would create tens of thousands of jobs and some have even forecasted as much as 100,000 jobs would be created.
“The job creation, economic and energy security arguments are overwhelmingly in favor of building it,” said US Sen. Dick Lugar, from Indiana. “The President opposing pipeline construction is not in the best interest of the United States.”
However, President Obama defended his record on energy policy and rejected allegations he was not concerned about the nation’s energy security.
The Keystone decision “does not change my Administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil. Under my Administration, domestic oil and natural gas production is up, while imports of foreign oil are down. In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security.”
Mainers Struggle with Cold
Republican senator for Maine Olympia Snowe is trying to get traction for a bill that would fully fund federal heat aid for low income families and pensioners this winter. (image: tvtechnology.com)
A bill that aims to fully fund the federal heat aid scheme to help vulnerable families this winter has stalled amid bickering in Washington, seacoastline.com reports.
Just before Christmas the government announced the Low Income Home Energy Assistance Program (LIHEAP) would be slashed from nearly $5 billion to $3.5 billion in its drive to reduce the spiralling federal deficit. A record 8.9 million households received LIHEAP heating assistance last year – up 54 percent from 2008 – and the number of recipients is tipped to rise this fiscal year as oil costs soar and the recession bites.
Three New England senators took a bill to Congress last month trying to stave off the LIHEAP cuts to protect vulnerable low-income families and pensioners who will otherwise have to choose between food and staying warm.
State agencies that distribute the money to needy recipients are already being forced to tighten criteria and reduce payouts, and firsthand stories of people struggling with rising winter heating bills are now beginning to surface.
Sen. Olympia Snowe, R-Maine, said Wednesday “the perfect storm” of rising oil prices and falling federal heating assistance was hitting Maine residents hard. The senator was visiting community action corporations throughout Maine to investigate the impact of reduced LIHEAP funding. She labelled the cuts “draconian” and said the remaining money was not enough to help poor Mainers and vulnerable citizens in cold-weather states, particularly in the Northeast, get through winter.
“There really wasn’t much of a tussle between the House and the Senate about [the funding cuts]. That’s a rare exception.”
But the bill to fully fund LIHEAP, which she jointly sponsored with Bernie Sanders of Vermont and Jack Reed of Rhode Island, had stalled in Congress and was getting little traction.
“It’s a tough battle. We had urged the majority leader in the Senate (Sen. Harry Reid) to allow time for debate on our measure, but we haven’t gotten it thus far,” she said. “But we’re not giving up. We’re going to continue to drive it through the next funding process.”
Stories she was hearing from around the state were heartbreaking. She cited the case of a young couple with three young children. The father lost his job and the mother was training to work in the health sector. They had been unable to buy oil, so were warming their home with space heaters.
“Their electric bill is out of sight,” Snowe said. “They’re doing everything right, but they can’t even find part-time jobs in this very difficult economy.”
In Maine, the cost of heating oil was now between $3.70 and $4 a gallon as world oil prices soar on global supply fears because of Iranian threats to close a key oil shipping route. Snowe said heat aid funding was “desperately needed.”
She hoped to build a coalition of senators with similar stories from their constituents in other states to renew traction for the LIHEAP funding bill.
“It gets back to the government’s obligation,” she said.
Booming Distillate Demand: EIA
Strong overseas demand for diesel and heating oil has pushed up production of distillates at US refineries to record levels. (image: todayifoundout.com)
US refineries are ramping up production of distillate fuel to record levels on the back of heavy overseas demand and higher profit margins.
Figures released yesterday by the Energy Information Administration show distillate yields, which include heating oil and diesel, reached 29.7 percent in October. That matches the previous record set in December 2008.
The yield figure measure the proportion of each barrel of crude oil a refinery turns into distillate relative to other refined products. In contrast to distillates, yields for gasoline, kerosene and heavy residual fuel oil are in decline.
Though heating oil consumption has been falling in the US in recent years, the distillate yield has been trending up since 2001. The EIA said the recent uptick in distillate production was partly explained by the significantly higher price margins refineries could make on distillate over gasoline.
Refineries still produce about 1.5 times more gasoline for every barrel of crude they process than distillate. But that figure has been dropping from the 1990s in response to market conditions and refineries look to maximize distillate yield and production.
But another key reason for the rise of distillate is burgeoning overseas demand. EIA figures show US exports of distillate fuel reached 656,000 barrels per day in 2010, and have grown each year since 2003. The surge in foreign diesel demand and offshore distillate exports is helping support heating oil prices, despite a mild start to the US winter.
This is because heating oil and diesel are nearly identical products. But because there is no diesel future traded by investors on energy markets, heating oil is often traded in its place. If diesel demand grows, heating oil futures are often bought up by investors, pushing up the price of fuel oil for homeowners.
Central and South American countries imported nearly half the US distillate exports – 311,000 barrels per day. Mexico was the region’s largest importer, averaging 94,000 daily barrels.
Limited refining capacity in those countries combined with their proximity to Gulf of Mexico refining markets also contributed to the rise in US distillate exports. Europe was also a big importer of US diesel and heating oil. The Netherlands was the single largest importer in 2010.
Consumer Tips to Handle Winter Weather
After a mild start to winter, cold weather is likely to hit the US Northeast, driving up demand for heating oil. (image: masslive.com)
As winters go, we’ve had it pretty easy so far this heating season. Mild temperatures have cut demand for heating oil and forced the Energy Information Administration to lower its winter price forecast.
The use of heating oil, primarily in the Northeast, is expected to drop 7.4 percent nationwide this winter. Heating-oil users are expected to pay an average of $3.79 a gallon this heating season. While that’s significantly higher than last year’s prices, it’s down on the record high forecast by EIA officials earlier this winter.
The agency now predicts fuel bills to rise by an average of 3.7 percent this winter to $2383. Only last month the EIA estimated heating oil users would pay an average of $2492 this winter.
But despite the mild start to winter, the National Weather Service predicts wintery rain, ice, snow and below freezing conditions will hit large swathes of the country before too long, meaning demand for fuel oil is likely to spike.
That being the case, the heating oil industry’s Energy Communications Council (ECC) is offering some simple steps to help folks stay warm and safe during extreme winter weather events.
“The top priority for oil heat retailers is keeping their customers warm,” ECC Spokesman Kevin Rooney said. “The last thing any driver wants is to be unable to deliver oil to a home or business because of a lack of access to the tank and fill pipe. Working together against the cold, ice and snow, we can ensure that delivery trucks and drivers have safe, easy access to tanks.”
The ECC offers the following recommendations:
Make sure you have an adequate heating oil supply. During and after a winter storm, roads may be inaccessible for delivery. Consider automatic delivery, which allows retailers to use computerized systems to signal contractors when tank volumes are low and need to be refilled.
If you have an in-ground tank, ensure that fill pipes are clearly marked and readily accessible for oil heat delivery drivers. A thin wire stake with a colored flag inserted into the ground next to fill pipes can work well. The marker should be higher than the average snow cover depth for your area.
Keep heating vents clear of snow and ice, and ensure carbon monoxide and smoke detectors are installed in your home. If a vent is obstructed, an appliance may malfunction and create a dangerous build-up of carbon monoxide.
If oil heat tanks are located behind a home or business, ensure fence gates can be opened and there is a clear path for deliveries. A hundred foot heating oil hose can weigh more than 100 pounds. Clearing excess snow and ice before the delivery driver arrives can help ensure safety as well as a timely delivery.
For above-ground outdoor tanks, large amounts of snow or ice sliding from roofs have the potential to damage heating fuel lines. Consumers should try to safely clear snow or ice buildup from the areas above their fuel lines to limit the chance of damage.
For a permanent solution to potential winter weather hazards, many oil heat retailers sell weatherproof enclosures for outdoor tanks to protect them from snow and ice. This option could save consumers considerable time, effort and money.
After a winter storm passes and it is safe to do so, check outdoor heating oil tanks for damage. Immediately call your local heating oil dealer if you suspect that any hazards exist. Do not attempt repairs yourself.
The ECC is comprised of the New England Fuel Institute, the Delaware Valley Fuel Dealers’ Association, the Empire State Petroleum Association, the Massachusetts Oilheat Council, the Fuel Merchants Association of New Jersey, Oil Heat Comfort of Long Island, the New York Oil Heating Association, Inc., and the Vermont Fuel Dealers Association, and is funded by NORA.
Union Calls for Hearings on Refinery Closures
The closure of three-Philadelphia refineries threatens to create shortages of heating oil in the Northeast and cause prices to spike. (image: philadelphia-reflections.com)
An oil workers union is calling for congressional and state hearings to investigate the closures of three Philadelphia refineries which are tipped to cause heating oil price spikes in the Northeast.
Sunoco and ConocoPhillips have announced plans to idle or close the oil refineries which collectively account for nearly half the Northeast’s total refining capacity. The United Steelworkers (USW) union says the closures will put thousands of workers out of jobs and make the US more dependent on volatile foreign oil imports, sacbee.com reports.
A report last week by the US Energy Information Administration warned the closures could result in spot supply shortages and sudden price increases for refined fuels in the Northeast. The region is the nation’s biggest heating oil user with around six million families dependent on fuel oil for warmth during the harsh winter.
Three Northeast lawmakers have written to Energy Secretary Steven Chu calling for the Northeast heating oil reserve to be boosted to two million barrels as a safeguard and have asked the Federal Trade Commission to investigate the companies’ plans on behalf of energy consumers.
Meanwhile, USW union leaders called this week for congressional and state hearing to investigate the devastating likely effects of the refineries’ closures.
The cited the Northeast’s fuel oil needs for heating, diesel, jet and auto fuel and the direct employment of 2500 workers plus thousands of other jobs dependent on the refineries. And they warned national economic security would be threatened if alternative fuel supplies had to be imported, which were subject to uncontrolled price hikes and supply shortages.
USW local president Denis Stephano noted the EIA’s warnings about supply shortages and pointed out the major disadvantages of alternative sources of petroleum products.
“Pipeline capacity is insufficient to make up the entire lost production volume, and depending on Gulf Coast refineries to ship enough oil products to the Northeast is dicey when hurricanes hit that area of the country,” Stephano said. “After Hurricanes Katrina and Rita, a number of refineries were down for six to nine months and it was the Northeast refineries that made up the slack. What happens now when this country doesn’t have a back-up system in place?”
Fellow union president Dave Miller spoke about the negative impact the refinery closures would have on the area’s communities.
“These refinery shutdowns will force small businesses to close, cost local governments millions of dollars in tax revenue and force schools to operate with millions of dollars less in funding,” Miller said. “We have a well-trained and experienced workforce at these refineries and we’re ready to help a new owner or owners make a lot of profit.”
Pre-Paid Heating Oil Law ‘Gutted’
Politicians in New Hampshire have watered down new legislation that was originally meant to protect consumers who entered into pre-paid heating oil contracts. (image: transgriot.blogspot.com)
A new law designed to protect the money of customers who sign up for pre-paid heating oil contracts is being labelled toothless by its main advocate, unionleader.com reports.
The New Hampshire House bill originally sought to force heating oil companies who took advance payment for winter heating oil deliveries to put 75 percent of customers’ money into escrow accounts to protect consumers’ investments. It aimed to ensure customers were reimbursed if their heating oil company went under or the money went missing before the pre-paid oil was delivered.
The bill’s prime sponsor was Rep. Lee Quandt. His original bill was drafted in response to the Flynn’s Oil case, in which the Exeter company went bankrupt in December 2009 leaving more than 300 customers without $554,603 worth of oil they purchased at the start of winter.
However, the House rejected the escrow account proposal and passed an amended bill last week. It instead requires oil companies only to warn consumers about the risk associated with entering into pre-buy contracts - adding the cautionary clause: “A pre-paid contract is not a guarantee … and you are at risk of losing some or all of your payment.”
Quandt said the amendment was “absolutely crazy” and gutted the intent of his original bill.
“Instead of requiring oil companies to put 75 percent of their pre-buy oil contract money into an escrow account dedicated to the purchase of customers’ fuel oil, so customers can be reimbursed should a supplier fail to deliver according to contract, it weakens consumer protections leaving New Hampshire citizens, business owners and even municipalities out in the cold,” Quandt said. “We need more, not just a disclosure that you may lose all your money if you do a pre-buy. I want some real teeth in there.”
Rep. Christopher Serlin had also supported tougher measures to protect consumers.
“If you pay for heating oil to keep your family or small business warm in the winter, that fuel should be delivered,” Serlin said in a statement. “And if for some reason that does not happen, your money should come back to you. Families and businesses should not be forced to simultaneously deal with the loss of pre-paid monies, as well as having to scramble to find new money to pay for oil that you should have had in the first place all in the dead of winter.”
The state’s heating oil industry, represented by the Oil Heat Council of New Hampshire, had supported the original bill as a means to protect customers from rogue dealers.
But political opponents of Quandt’s had argued the escrow provisions would give consumers false hope because the money would be impossible to track if an oil company faced financial difficulties or its accounts were managed by a bank. Critics also alleged the measures would kill the pre-buy heating oil market because oil companies needed the money for up-front capital.
Many heating oil companies offer pre-paid contracts allowing customers to lock in lower summer oil prices ahead of winter, when prices typically rise. While the deals can provide savings, tough economic times combined with volatile world oil markets have seen some oil companies forced to the wall owing pre-paid customers for oil they could not deliver.
HeatingOil.com recommends customers compare heating oil dealers and study contracts before signing up to pre-paid oil agreements and make sure you only deal with reputable, licensed dealers.
2011 in Review
A massive earthquake in March off the coast of Japan triggered a killer tsunami that knocked out nuclear power plants and affected world oil prices. (image: nationalgeographic.com)
A devastating Japanese tsunami, the Arab Spring uprising in the Middle East and dramatic developments in US crude production helped characterize oil markets in 2011.
The US Energy Information Administration released its 2011 in Review yesterday, a summary of the key developments that affected crude and heating oil supply and demand last year.
The earthquake and tsunami that devastated Japan in March knocked out nuclear power plants and initially cut oil demand, sending prices lower, as the Japanese economy faltered. However Japanese oil demand rebounded as Japan sought alternative energy supplies to rebuild.
Transportation bottlenecks in the US caused massive backlogs of crude oil at inland US markets, largely due to rising oil production in the US and Canada. This triggered a record price spread between the US benchmark West Texas Crude and European benchmark North Sea Brent. The two oil grades have historically traded within similar ranges and edged closer towards year’s end.
Dramatic developments in shale oil production, including the proliferation of hydraulic fracturing and horizontal drilling, helped boost oil and natural gas production in the US to record levels. Similar advances in Canada and Brazil mean the Americas are edging closer to oil “self-sufficiency”, the EIA said.
“The result is that refined product trade flows are being redrawn. In 2011, the United States shifted to net product exporter status for the first time since at least 1949.”
The Arab Spring uprising sent political shockwaves around the world, as oil-producing nations in the Middle East wrestled with internal pro-democracy tensions, raising the treat of global oil supply disruptions.
A bloody civil war in Libya to overthrow dictator Colonel Muammar Gaddafi sent oil prices skyrocketing when the North African nation’s 1.5 million daily barrels of oil supply was cut off.
The subsequent failure of OPEC oil producers in June to agree to a production increase triggered a strategic oil reserve release of 60 million barrels coordinated by the International Energy Agency – just the third such release in history. Debate raged about whether this helped bring prices down or whether the prospect of less crude in reserve for future supply shocks had in fact caused prices to rise even further.
Looking ahead, there are fears Middle Eastern regimes that have launched massive spending programs in the past year to counter pro-democracy insurgency will favor higher oil prices during 2012 to pay balance their books.
And developments in Iran, which faces more international sanctions in response to its apparent nuclear weapons program, threatens to to send world oil prices higher, having already breached the $100 a barrel mark this week.
HO Contracts Post Big Yearly Gain
Facing Western sanctions designed to hobble its apparent nuclear weapons program, Iran is threatening to blockade a key oil shipping route in and out of the Persian Gulf, sending oil prices higher. (image: cbc.ca)
Heating Oil contracts have posted their third consecutive annual price increase, surging 15 percent in 2011, bloomberg.com reports. The bullish result came despite tought global economic conditions and has helped push residential prices to near record levels this winter.
Heating oil’s rise is being attributed to strong international demand for distillate fuels and the shuttering of refineries in Europe and the Northeast, which analysts fear will lead to supply shortages. The 15 percent price increase for heating oil futures contracts comes on the back of a 20 percent jump in 2010.
International demand for fuel oil is strong. The US exported a record 1.07 million barrels a day of heating oil and diesel fuel in October, US Energy Department figures show. About 18 percent, or 196,000 barrels a day, went to the Netherlands, the top destination for US diesel and heating oil cargoes.
Meanwhile, prices marched higher in late December amid supply fears after Petroplus Holdings AG (PPHN), Europe’s largest independent refiner by capacity, began shutting plants when banks froze $1 billion of its loans, forexdice.com reports.
And the Energy Information Administration warned last month of potential supply disruptions and price volatility in the US Northeast because of plans to shutter three Pennsylvania refineries that account for half the region’s refined fuel production.
Crude oil prices, which are closely linked to those of heating oil, also posted significant gains during 2011. Crude averaged US$95.09 a barrel in New York during the last year, up from $79.64 in 2010 and US$62.11 in 2009, canadianbusiness.com reports.
The price of benchmark West Texas Intermediate rose as high as US$113.93 a barrel in April, then dropped to $75.67 by October. Oil’s fortunes were closely linked to the year’s geopolitical and financial developments. A civil war in Libya effectively cut off the North African nation’s 1.5 million daily barrels of crude supply, sending prices spiraling up. But persistent high prices cut into world oil demand later in the year and prices came crashing back.
But oil prices have since rebounded to near $100 a barrel on Iranian threats to close key shipping lanes in the Persian Gulf if the West hits Iran with new sanctions over its nuclear program. The Strait of Hormuz is a key oil route used by tankers carrying one-sixth of the world’s oil exports. Any disruptions to this route could force world oil prices to spike to new levels.
And high oil prices are expected to continue weighing on the US economy this year as it struggles to rebound.
“It’s like leaving the parking brake on while you’re trying to drive the economy forward,” said Michael Lynch, president of Strategic Energy & Economic Research.
Calls to Boost Northeast HO Reserve
US Energy Secretary Steven Chu is under pressure to increase the Northeast heating oil reserve by one million barrels to counter potential supply disruptions this winter. (image: businessweek.com)
The federal government is under pressure to increase the Northeast’s heating oil reserve to two million barrels to combat possible price spikes amid plans to idle three Pennsylvania oil refineries.
Three House Democrats wrote to Energy Secretary Steven Chu last week in response to proposals by ConocoPhillips and Sunoco to idle the three oil refineries, thehill.com reported. A recent study by the Energy Information Administration predicts the move will result in spot shortages of refined fuels in the Northeast - where millions of families rely on heating oil for warmth during winter - increasing price volatility. The three refineries collectively account for about half of the Northeast’s total refining capacity.
The possible refinery closures would hit the Northeast hard. The EIA has already forecast average heating oil prices to rise 8 percent this winter compared to last year, hitting new record highs. And the federal government has just signed off a $1.2 billion cut to its national heat fuel aid program (LIHEAP) which helps the poor and elderly pay spiraling winter energy costs.
“Given the already high prices consumers are facing this winter, DOE must ensure that consumers are safeguarded from spot shortages and higher prices resulting from these oil companies reducing refining capacity,” the letter said.
The lawmakers, Reps. Edward Markey (D-Mass.), Robert Brady (D-Pa.), and Allyson Schwartz (D-Pa.), pressed Chu to increase the size of the Northeast Home Heating Oil Reserve to two million barrels from its current one million barrel level. The reserve was created in 2000 as part of the Energy Policy and Conservation Act to protect consumers from supply disruptions during severe weather. But the total amount of heating oil held in the reserve has halved recently with the rise of cleaner burning ultra-low sulfur fuel. Given the likelihood of winter supply disruptions if the three Northeast refineries close, the lawmakers want the federal government to boost the reserve to its original size to provide the region with a strategic cushion.
Meanwhile, in a separate letter, Markey and Brady pressed the Federal Trade Commission to investigate the companies’ plans to idle the refineries.
“We are extremely concerned that the decisions by these two oil companies to remove such a substantial amount of the Northeast’s refining capacity could adversely impact consumers and we request that the FTC examine the enclosed EIA analysis as part of its ongoing review of these oil company actions, consistent with the FTC’s responsibilities to protect consumers from anticompetitive or other improper practices,” the lawmakers said in the letter to FTC Chairman Jon Leibowitz.
Nearly six million families in the Northeast rely on heating oil for their primary source of heating, making it the nation’s biggest user of fuel oil by far. HeatingOil.com will keep tabs on this developing story and bring you updates
Oil Artist Uses Crude in Ghostly Works
Piers Secunda's art works are painted in crude drawn from the very pioneering oil wells his work depicts. (image: thenational.ae)
An artist is documenting the history of oil using crude meticulously sourced from individual oil wells all over the planet, thenational.ae reports.
Piers Secunda’s work hangs in a gallery in London. His ghostly images are painted on silkscreen to recreate old photographs of pioneering oil fields that characterize the industry’s early sweat and toil.
But rather than using any old oil for his painstaking, nostalgic drawings, Secunda spent years in some case tracking down samples from the exact wells he was reproducing to give his work a unique sense of authenticity.
“Actually getting hold of the crude oil was quite a challenge. You can go on to a website and buy 100,000 barrels of the stuff, but of course you never actually see it. It’s not delivered to your door. But there are tiny specimen samples and novelty bottles from museums if you look hard enough. I spent a lot of time on eBay. A lot of time. “
Secunda set out to record a hugely important bygone age and remind viewers of oil’s immense importance in today’s society. One image depicts a significant development in the history of the Middle East.
“This one is called Dammam No.7 Blowing In,” he says. “It shows the moment in 1937 when the first oil blew out of this tiny little well head in Saudi Arabia. And this is the point at which global politics, economics and the history of energy shifts in a colossal way. It was the beginning of something completely new in the Middle East.”
To Secunda’s immense credit, he didn’t just search archives, find important photographs and dash off a silkscreen using any oil at hand. He waited two years until he tracked down oil from that exact well, Dammam No.7, before commencing that particular work.
“And then I found a corporate paperweight on eBay with the oil on the inside, marked Dammam No.7. You might think that a bit obsessive, but I really wanted the story of that specific well to be portrayed through its medium.”
Similar attention to detail has gone into all Secunda’s work. Whether the drawing depicts a Texan, Canadian or Californian oilfield, it is painted using oil from the correct well. He also refuses to make any political statements about the provenance of oil, despite it being “an inherently political material.”
“I genuinely don’t think I’m in a position to say oil is bad. The incredible thing about crude oil is that it’s absolutely and totally inseparable from everything we do. It facilitates everything - if you remove it, you’d have mayhem.
“I don’t take a position because I want this to be a record of an amazingly important time. You have the Stone Age, the Iron Age, the Bronze Age, and the petrochemical age will be acknowledged in the same way. I think it can’t not be - it’s too significant.”
His drawings are made in the browny hue of dried crude oil. But HeatingOil.com wonders what would happen if Secunda added heating oil to his work, which features a red dye to distinguish it from diesel.
Just a thought.
International Community Considers New Iranian Sanctions
Iran faces further sanction designed to restrict its oil revenue income and prevent it from manufacturing nuclear weapons. (image: flightsaustralia.com.au)
The international community is stepping up efforts to restrict Iran’s oil revenue in a bid to hobble its suspected nuclear weapons program, businessweek.com reports.
As the European Union prepares to level new sanctions on the pariah Middle Eastern state in the form of an oil embargo, US officials have held high level meetings to discuss further possible measures.
At a meeting in Rome this week, officials vowed to increase pressure on Iran, the world’s third biggest crude producer in 2010, to abandon its nuclear ambitions, an Italian Foreign Ministry statement said.
The Obama administration is preparing to implement Congressionally-mandated sanctions on Iran’s central bank to restrict revenue from oil sales. And US officials are urging Japan to cut its reliance on Iranian oil imports and impose tariffs. Japan is currently the second biggest purchaser of Iranian crude.
However there are fears restricting Iranian production and supply of international markets could cause world oil prices to surge, knee-capping the tentative global economic recovery.
The prospect of a European embargo of Iranian crude helped push oil prices higher on Tuesday, with crude adding $3.34, or 3.6 percent, to settle at $97.22 a barrel in New York.
As heating oil prices are closely linked to those of crude, any spike in world oil prices is likely to put further pressure on households that rely on fuel oil to heat their homes during winter.
Iran is the second biggest OPEC oil producing nation after Saudi Arabia. It exported an average of 2.58 million barrels a day in 2010, according to OPEC figures and earned $73 billion in oil revenue – more than half its national budget.
US State Department spokeswoman Victoria Nuland said the US was “encouraging all of our partners to do what they can to wean themselves from Iranian oil.”
Gulf diplomats, who spoke on condition of anonymity, said they had reassured the US and Europe of their willingness to increase production to offset the loss of Iranian oil in Europe.
But Iranian Oil Minister Rostam Qasemi has downplayed further sanctions, saying the world needs Iranian supply and can’t make up the shortfall.
Meanwhile, analysts warn further sanctions could backfire on the international community if prices increase and the Iranian regime gains financially through its remaining buyers.
“If you create a spike in the price of oil, they’re still going to be able to benefit, because they’re selling their oil,” said Dennis Ross, who until recently served as Obama’s special adviser on Iran. The trick was doing this “in a way that the Iranians don’t benefit from,” he said.
