UK Heating Oil Firms Cleared of Price Gouging
British heating oil companies were accused of price gouging after prices spiked last winter. But an investigation by the Office of Fair Trading has cleared them of profiteering. (image: ucl.ac.uk)
A consumer watchdog has cleared British heating supplies of profiteering allegations, the BBC reports.
The Office of Fair Trading (OFT) launched an investigation in January after prices spiked to record levels last winter.
About 3.5 million British homeowners are off the main gas grid and most rely on heating oil or petroleum gas to heat their homes. But the OFT has cleared heating oil companies of accusations they engaged in price gouging.
In a report last week, it found the “price spike” lasted only a short time. Watchdog officials said the sudden increase in price was due to a 40 percent spike in demand combined with oil supply problems, caused by severe cold weather making roads impassable.
They found that 90 percent of the change in customers’ heating oil prices was due to variations in the price of crude oil, and nearly all off-grid customers had a choice of fuel oil dealers. This meant competition between sellers had restrained prices and prevented profiteering the OFT said.
“On the whole, competition works well, with consumers offered a good choice of suppliers, and the off-grid sector does not need price regulation.”
However officials did find evidence of dodgy practices by some firms.
“The OFT does have concerns that some heating oil and possibly some other off-grid fuel suppliers may not be treating their customers fairly and is currently examining practices further.”
The concerns related to claims that some suppliers had charged more at the point of delivery than they had originally quoted customers.
Only last month the OFT criticised several British heating oil price comparison websites for not disclosing links to heating oil companies or failing to offer genuine comparisons between suppliers.
Audrey Gallacher of Consumer Focus said:
“It is welcome that the OFT has taken action on comparison sites and is looking further into issues on dodgy pricing practices and contract lock-ins. But as many customers will be worried about prices this winter, they need to see action taken quickly and strong protections in place.”
GB Oils, owned by British heating oil giant DCC Group, welcomed the OFT’s finding that the market was competitive. The company was “fully committed to complying with all relevant consumer protection laws and has been actively enhancing its pricing practices and brand transparency to ensure the highest standards of customer service are being provided.”
About nine million US homes rely on heating oil for warmth. The Energy Information Administration has warned that average heating oil prices could reach could hit their highest ever level this winter.
Boilerjuice Website Sale Looms After Controversy
Heating oil prices are expected to spike this winter when temperatures drop and demand increases. (image: treehugger.com)
Just weeks after drawing criticism from the Office of Fair Trading, the UK’s biggest heating oil distributor is selling off its Boilerjuice price comparison website.
And the OFT is due to report back this month on its investigation into the heating oil industry. The probe followed widespread concerns about price gouging last winter in Britain when oil prices spiked amid freezing temperatures.
DCC Group, a €1.6 billion Dublin-based conglomerate, is tipped to announce the sale of Boilerjuice website this week, The Telegraph reported.
The move follows criticism last month by the OFT of several price comparison websites. Boilerjuice was slated for not disclosing its links to DCC. Another price comparison website, fuelfighter.co.uk, was revealed to have posted false testimonials to attract customers.
About four million homes are not connected to the UK mains gas grid and most rely on heating oil. Many of them faced massive energy bills last winter when prices spike to unprecedented levels. The huge bills forced many homeowners into fuel poverty, triggering the OFT investigation.
The Telegraph reports that DCC has since been seeking to win round critics of its market power in Britain. The conglomerate will control almost a third of the UK home heating oil market if its latest acquisition is approved by regulators.
A spokesman for DCC said Boilerjuice “was, and remains, an independent price comparison website, comparing our prices and those of hundreds of independent suppliers to offer buyers the best prices in their area.
“Unfortunately, this independence was questioned by some quarters of the media, albeit incorrectly, because of our ownership of the site. We have therefore sold Boilerjuice to its managing director, Paul Ward, and wish him continued success at giving consumers a truly independent means of finding the best prices.”
Ward, who founded the Boilerjuice site, confirmed the sale. “I’m confident the acquisition will cement our market-leading position and enable the brand to go from strength to strength as a truly independent and impartial website as it has always been.”
Unlike the UK sites, HeatingOil.com has no links to any one oil supplier, meaning we are independent from the industry. We aim to put customers in touch with suppliers in their area, so they can make informed choices around oil prices and services.
Heating Oil Price Trend for July 20: +2¢
The European Central Bank controls monetary policies for the 17 Eurozone member states. Its primary headquarters are in Frankfurt, Germany, where leaders are currently working to bring a secure end to the debt crisis. (image: asiabizz.com and Nicholas Whitaker for HeatingOil.com)
Oil prices escalated again on Tuesday as top European officials took proactive steps towards resolving the debt crisis and U.S. housing experts turned in a positive June report. Heating oil climbed two cents as crude jumped $1.57 to finish at $97.50 a barrel on the New York Mercantile Exchange.
Oil markets received a boost when a European Central Bank official revealed the euro zone may be nearly ready to approve another rescue bailout package for Greece. The bank agreed to soften its conditions for another bailout package, quelling some fears of a default, which would almost certainly be debilitating to the global economy. The news strengthened the euro, another factor that typically pushes oil prices upwards. Top European leaders will meet Thursday to discuss the issue further.
In U.S. economic news, the Commerce Department’s surprising June report saw housing starts rising 14.6% in its best showing since January. Updates on housing may not seem relevant to heating oil users, but because America is the world’s most voracious consumer of oil, indications of economic recovery (or recession) can mean big changes in demand and pricing. Plus, President Obama received bipartisan support from the Senate on the debt limit issue, a good sign lawmakers are crawling towards a decision on raising the nation’s debt ceiling.
Strategists expect more changes to come within the next few days as the American Petroleum Institute and Department of Energy release their weekly fuel stockpile reports. Analysts have predicted inventories of distillates, a category that includes diesel and heating oil, spiked approximately 1.2 million barrels last week.
The average retail heating oil price in the Northeast is two cents higher than Tuesday’s average price.
British Consumer Watchdog Launches Probe Into Home Heating Oil Prices
Britian was hit by freezing weather and heavy snow this winter. But millions of off-grid homes faced spiraling heating oil prices as they tried to keep warm. The Office of Fair Trading has now launched an investigation into the cost of alternative home fuel sources. (image: freefoto.com)
A British consumer watchdog has launched a far-reaching study into the plight of 3.5 million households amid widespread concern about the cost of heating oil.
It follows complaints to the Office of Fair Trading about spiraling winter heating oil prices, misleading information from dealers, a lack of transparency and barriers to switching suppliers, thisismoney.co.uk reported on Wednesday.
About 3.5 million British homeowners are off the main gas grid and most rely on heating oil or petroleum gas to heat their homes. But they face high costs as they need to have heating fuel delivered to them and stored.
During the cold weather in December, many of these homeowners could not get fuel delivered because of impassible roads. As desperate customers sought fuel, there were reports that some firms increased prices.
Similar price concerns have been expressed in the US, where 9 percent of the nation’s homes use heating oil. Oil prices have surged here on the back of unrest in the Middle East and high winter demand, putting pressure on cash-strapped consumers who face mounting energy bills to stay warm.
The OFT’s study, announced overnight, will investigate whether there is enough competition between British firms, and if supply contracts are fair for consumers. It will also look at alternative “green” fuel sources such as solar power and wind turbines, and consider if such renewable energy sources are effective alternatives to heating oil and LPG, oilfiredup.com reported.
It follows accusations in January of profiteering by price comparison website boilerjuice.com, whose parent company, DCC Energy, is the largest heating oil supplier in the UK and Ireland.
OFT director of infrastructure Mary Starks said millions of households were not connected to the national gas grid.
“We want to investigate whether the markets in alternative sources of domestic energy are working competitively, efficiently and fairly for [consumers] and, if not, what improvements can be made.”
“The severe cold weather in December brought a raft of complaints about heating oil in particular. Response to our scoping consultation confirmed that concerns remain. We will now investigate these in more details and report back before next winter.”
The OFT received more than 300 submissions from off-grid customers, consumer associations and industry on its study. The high number of submissions reflected consumer concern, it said.
Consumer Focus energy expert Andrew Hallett welcomed the announcement, saying high oil prices affected millions of people living in rural areas.
“These consumers have experienced extraordinary increases in the cost of filling their tanks as the price of oil rocketed last winter. These people are being penalized for nothing more than living in rural areas and smaller towns and villages.”
The OFT will report back on the study in October.
UK Government Launches Investigation into Heating Oil Prices
UK energy minister Charles Hendry supports an investigation into the British heating oil industry after huge price spikes at the end of last year. (image: charleshendry.com)
As HeatingOil.com reported in early December, heating oil users in the United Kingdom saw prices blast off in the midst of weeks of Arctic temperatures and heavy snow. The UK Office of Fair Trading (OFT) announced this week that it had launched an official investigation into the country’s heating oil market and would look into consumer allegations of price gouging during the extreme weather, The Telegraph reported on Tuesday.
British heating oil users complained that prices spiked right when they needed the fuel most, in the middle of a record cold snap that engulfed much of Europe. Those price spikes, according to the Telegraph, far outpaced increases in wholesale prices:
Customers reported prices jumping from 40p a litre to 70p a litre this winter. This is despite only a 10pc rise in the wholesale price.
To be sure, a 75 percent price increase in a matter of weeks or even months is well outside the range of normal price fluctuations, even during times of high demand. In the US, heating oil prices have been on the rise for most of the heating season so far, and although prices have risen dramatically since October, the increases have been gradual.
The announcement from the OFT follows a call for an investigation from energy minister Charles Hendry in an interview with the Telegraph on Friday. During the interview, Hendry said he was particularly concerned about the “fact that quite a number of suppliers are owned by one individual company”.
According to a report published Tuesday by the Daily Mail, the largest supplier of home heating oil in the UK is DCC Energy, which could be the company to which Hendry was referring. Seperately, DCC Energy has been hit with allegations of deceptive practices made against the price comparison site it owns, BoilerJuice.com. Some consumers have claimed in recent weeks that BoilerJuice.com aided DCC Energy in “profiteering” by misrepresenting heating oil dealers it owns as competing independent dealers.
According to Hendry, the OFT hopes to conclude its investigation into the UK heating oil industry “by next winter.”
UK Heating Oil Website Accused of “Profiteering”
Extreme cold in London and the rest of the UK this heating season has caused a spike in heating oil demand that some users claim led to profiteering on the part of price comparison site boilerjuice.com. (image: blog.visitlondon.com)
Heating oil customers in the United Kingdom have endured serious hardship this heating season, and last week accusations of profiteering on the part of a price comparison website was added to their list of woes. The UK newspaper Daily Mail reported on price manipulation accusations against the heating oil website, boilerjuice.com, on January 10.
Troubles for British heating oil users began in early December, when winter storms of historic intensity pummeled much of Europe, bringing huge amounts of snow and record-low temperatures. The series of storms caused a major spike in demand for heating oil while at the same time severely disrupting transport of the fuel by rendering hundred of miles of roads impassible. Those two factors predictably led to massive price increases over a very short time. By mid-December, shortages and transport delays reached crisis level, with some chilly heating oil customers being told they would have to wait a month or more for deliveries. At that time, some consumers began to complain of price gouging on the part of heating oil dealers taking advantage of desperate customers. Those complaints spawned an investigation by the UK government’s Office of Fair Trading, which has so far not produced any findings of foul play.
But more specific accusations of profiteering and price manipulation during the long European cold snap arose in the first week of January. Heating oil customers who use boilerjuice.com complained that, contrary to the site’s pledge to provide users with the “cheapest available price” in their area, the site delivered them hugely inflated prices during and after December’s blizzards. The Office of Fair Trading is now looking into the accusations leveled at boilerjuice. Many of the complaints center on boilerjuice’s parent company, DCC Energy, the largest heating oil supplier in the UK and Ireland that controls 14 percent and 20 percent of those markets, respectively, according to the DCC Energy website. Although details on how boilerjuice.com operates are not entirely clear, disaffected users claim that the heating oil dealers whose prices (but not names) are listed on the site are all owned by DCC Energy, which eliminates competition among boilerjuice dealers and allows DCC to effectively raise all of the prices displayed on the site. Accusers say that boilerjuice did just that when demand for heating oil was sky-high, and the Daily Mail’s coverage included a finding of much higher prices on boilerjuice than were being offered directly by dealers in the same area:
[On January 9, boilerjuice.com] listed the best price in West Cornwall for an urgent 500-litre delivery at £493.50 from an unnamed firm. But independent Consols Oils was charging £316.58.
That £179.92 (US$286.22) difference in price for the same amount of oil in the same area is large enough to defy simple explanation, though DCC Energy, in response to price complaints, simply stated, “The recent very severe weather conditions have led to unprecedented demand and shortages of product.” Requests for comment to boilerjuice.com and DCC Energy were not returned.
In November, a UK heating oil blog listed 38 heating oil suppliers, implying that their prices appear on boilerjuice and claiming all 38 companies were owned by DCC, thereby impugning any appearance of competition among listed dealers driving down prices. However, the claims made on the blog could not be verified. But if the accusations made against DCC and boilerjuice are even partially true—that a majority of heating oil suppliers whose prices are listed on the site are owned by the same corporation that owns the site itself—the independence and reliability of the site should be questioned and closely examined.
Although boilerjuice.com does not operate in the United States, it has taken the domain boilerjuice.net on which it declares plans to enter the US heating oil market. Whether or not boilerjuice brings its business to the States, American heating oil users can take away a lesson from the accusations currently surrounding the site. The basic premise that drives most heating oil listing and reference sites, including HeatingOil.com, is that competition among heating oil dealers for business results in lower prices for consumers. But if all of the dealers participating in a listing service like boilerjuice are owned by the same company, the appearance of competition is…well, nothing more than an elaborate display cultivated to win customers’ trust and hard-earned money.
Heating oil users around the world should know that some heating oil listing sites, specifically those that display different prices for comparison, might not be the independent service they claim. Investigating the ownership and financial interests of comparison sites before using them is the best way to ensure that heating oil users are in fact getting the best deals possible from a truly independent site. Regardless of the validity of the accusations of profiteering made against boilerjuice, the mere fact that it is owned by a company with a major stake in the retail heating oil business and does not disclose the names of the dealers whose prices it displays to users are cause for serious skepticism of the site’s reliability as a way to pay less for oil.
Stay with HeatingOil.com for updates as the investigation into boilerjuice.com’s practices in the UK develops.
Heating Oil Situation in UK Reaches “Crisis” Level
The United Kingdom has been pummeled by extreme winter weather over the last two weeks with more on the way, causing heating oil shortages and price spikes. (image: Getty via telegraph.co.uk)
On December 6, HeatingOil.com reported on the combination of fierce winter storms and spiking prices hitting heating oil users in the United Kingdom. Since then, the situation has only worsened, and a shortage of heating oil has elicited discussions of fuel rationing as another major storm system hunkers down over the British Isles.
The London Telegraph reported on Thursday that heating oil users, especially in rural areas, have been told their requested deliveries will take up to three or four weeks due to spiking demand and roads blocked with snow and ice. The British energy minister, Charles Hendry, called the situation “very serious” and said the government would do all it could to get people the oil they need to stay warm. The first concrete step that the government took was to extend the legal limit of how long heating oil truck drivers can be on the road per day by one hour. According to the Telegraph, Hendry also brought up the possibility of rationing heating oil to ensure supplies are distributed evenly to prevent residents from going cold through the Christmas holiday next weekend. But the UK Department of Energy on Friday backed away from possible rationing, declaring that such a plan is “not on the cards,” Sky News reported on Friday.
Skyrocketing heating oil prices have also attracted the attention of the British government, whose Office of Fair Trading is investigating accusations of price fixing by heating oil dealers attempting to take advantage of desperate customers. The average cost of a liter (about 1/3 gallon) of heating oil in the UK jumped by 30 pence (47 cents)—the equivalent of about $1.50 per gallon—in the last month.
Meanwhile, a fresh storm has arrived in the UK and is expected to drop six inches or more of snow on the already-buried nation and usher in temperatures as low as 5ºF.
UK Hit With Combo of Heating Oil Price Spike and Frigid Weather
A plane kicks up snow at London's Gatwick Airport, which had previously been closed for two days. The major blizzard that hit the UK last week exacerbated the effects of a heating oil price spike. (image: Gareth Fuller/Press Association, via Associated Press and nytimes.com)
American heating oil users are not happy about paying around 10 percent more for their heating oil than they did a year ago, but their counterparts across the pond are much worse off so far this season. On Wednesday, the BBC reported that heating oil prices in Northern Ireland have increased by 23 percent since this time last year.
According to the BBC, the cost to fill a typical 900-liter (238-gallon) home heating oil tank currently costs £443 ($695) in Northern Ireland, up a whopping £84 ($132) from last year. Heating oil dealers in the region say that they are simply passing high wholesale costs on to consumers, but it is unclear why prices have increased so much more in Northern Ireland than in other parts of the UK and the world. The Consumer Council of Northern Ireland is investigating the cause of the price spike.
The heating oil price spike could not have come at a worse time for Northern Ireland, which was recently hit, along with other areas in Europe, with freezing temperatures and heavy snowfall. In addition to driving up demand for heating oil, the extreme weather also disrupted fuel supplies throughout the UK, leaving many residents short on heating oil and gasoline. On Thursday, the UK Red Cross encouraged heating oil users, especially the elderly, to set aside an extra stash of fuel to ensure a warm home if supplies are interrupted, the British heating oil site boilerjuice.com reported.
Although the worst of the recent blizzard appears to have moved away from the UK, rain, snow, and sub-zero temperatures continue to cause problems in continental Europe.
Supply Interruptions and Strong Foreign Demand Sustaining Short-Term Heating Oil Price Rally
Refineries around the US and Europe are increasing heating oil production to take advantage of rising prices. (image: secure.imex.pro)
Producing heating oil is now almost twice as profitable for oil refiners as producing gasoline, Bloomberg Businessweek reported on Thursday. Demand for heating oil and diesel is extremely strong in Europe and South America, a result of economic recoveries that are heating up in countries like Germany and Argentina. In Europe (where heating oil is referred to as gasoil), a port workers’ strike in France currently in its eleventh day has taken a bite out of supplies, and Southern European refineries are running at minimum capacity due to lack of crude oil delivered by sea. The current per-barrel profit on refining crude oil into heating oil and diesel is three times what it was at this time last year, and nearly twice as much as the current profit provided by producing gasoline. On top of heating oil’s premium over gasoline, the fuel is also fetching a substantially higher price in Europe than in the US. With huge profits to be made and supply interruptions leaving a gap in the European market, US refiners are working furiously to crank out and export distillates (a category of petroleum fuel comprised mostly of heating oil and diesel).
The convergence of these bullish factors on the heating oil market is driving prices up, extending a rally that kicked off early last week. It looks like the rally will continue at least for another week or so (although the price of heating oil is down 2.3 percent at the NYMEX as of 12:31 pm Eastern Time today) bringing higher retail prices. But the factors driving the rally are largely temporary, which makes it unlikely that the price of heating oil will climb steadily for several weeks or months. When the strike in France eventually ends and refiners in the US and Europe complete their transition to focusing on heating oil production, supply constraints will loosen and prices will begin to fall. This plausible scenario fits in nicely with predictions made by investment bank Merrill Lynch last week, which characterized the recent rally in heating oil prices as “premature,” and forecast significant price drops in December or January.
Other factors, specifically a weakening US dollar, are currently supporting rising crude prices, and could continue to do so, irrespective of fundamental forces driving heating oil prices. However, the recent rally in crude prices also lacks long-term potential, as overall oil stockpiles in the US, the world’s leading oil consumer, remain near 27-year high levels.
The medium-term outlook for heating oil prices outlined by these factors shows higher prices now and perhaps through the end of October, but lower prices to follow in November, December, and January. Not the best possible scenario for heating oil users, but certainly more encouraging than the prospect of a sustained upward trajectory often foreseen at this time of year.
Mafia Muscle in on Italy’s Wind Power
As The Simpsons' Fat Tony might say, "I'll give you a turbine you can't refuse." (image: pawatercooler.com)
Electricity generated by wind farms is clean energy—it does not produce air pollution or greenhouse gases, and it does not generate waste. But if those wind farms are tied to dirty dealings, is the energy still clean?
The UK’s Telegraph reported on Sunday that European organized crime has gotten into the wind business, and its mark is clearest in the Mafia’s ancestral home of Sicily. The European Union offers generous loans and subsidies to builders of wind farms and other green energy generation facilities, and the Mafia have apparently used extortion and money laundering schemes to take advantage of them.
Two Italian investigations into wind farm scams have yielded evidence that criminals bribed corrupt local officials for access to wind farm subsidies and embezzled EU funds. According to the Telegraph, one alleged Mafioso told his wife in a wiretapped phone conversation, “Not one turbine blade will be built in Mazara unless I agree to it.”
Perhaps the entrance of high-profile criminals into the renewable energy game is a good sign. Organized crime only gets into business when there’s money to be made, so if the Mafia is in the wind business it could be taken as a sign that the sometimes-unprofitable sector is in fact “legitimate.”
Police in Rural England Begin “Tagging” Heating Oil to Prevent Theft
The idyllic farmhouses of Hampshire County, Egland are prime targets for heating oil theives. (image: holiday-cottages-rentals.com)
Heating oil theft is not a very common occurrence, but it does happen. Tough economic times have driven increasing numbers of desperate thieves to victimize unsuspecting homeowners in recent years draining their heating oil tanks. Such thefts usually occur in rural areas, where shady characters operating a truck or oil pump are more likely to go unnoticed, and the vast majority of the thefts take place in the UK.
In an attempt to reduce heating oil thefts this coming heating season, authorities in Hampshire County, England will soon provide free bottles of a heating oil additive that will “chemically tag” rural residents’ heating oil, the BBC reported on Sunday. The tagging will link the heating oil to its original owner so it can be returned in the event of recovery. The unusual initiative is a reaction to the quadrupling of heating oil thefts in Hampshire last winter.
Ruth Harper-Adams, a local farm advocate in Hampshire’s Test Valley region noted the negative effects of heating oil theft on rural communities:
Fuel theft from farmyards not only has a costly impact, it also creates other huge implications, such as delays in farming operations. It may also create an environmental problem where tank damage is a consequence.
The effectiveness of the tagging systems of course relies on the thieves eventually being caught and the stolen oil recovered, but in an area where heating oil theft is such a serious problem, it seems that almost any preventative measure is worth trying.
Don’t Drink and Trade: London Oil Broker Fined for Drunken Oil Futures Trades
An oil trader’s drinking problem pushed the price of Brent crude oil to new highs in 2009. (image: muchomartiniglasses.com)
Oil prices are determined by a number of different factors: supply, demand, currency values, global stock markets, and weeklong drinking binges by oil traders. Steven Noel Perkins, a former oil trader, has been fined £72,000 (US$108,000) for the unauthorized purchase of $520 million worth of Brent crude oil futures contracts—some 7 million barrels—while in the middle of a bender.
Perkins worked for PVM Oil Futures Ltd. and traded on the ICE Futures Europe exchange in London. PVM trades on behalf of clients, but Perkins’s trades of June 29 and 30, 2009 were made without any authorization from clients and, according to the British financial regulator FSA, “As a direct result of Perkins’ trading, the price of Brent increased significantly.” Reuters reports that Perkins’s trades pushed the price of Brent crude to a 2009 high of $73.50 a barrel.
Bloomberg reports the full story of the illicit trades, which began on Monday, June 29, 2009. A weekend drinking jag that included a golf trip with PVM lasted into Monday for Perkins, and he phoned in eight trades—only one of them authorized by a client—to a PVM broker that afternoon. The trading continued into the early morning hours of Tuesday, June 30, at which point Perkins had accumulated contracts for 7 million barrels of oil, though he was in no condition to know it. According to a statement from the FSA:
He drank heavily throughout the weekend and continued drinking from around midday on Monday 29 June….He claims to have limited recollection of events on Monday and claims to have been in an alcohol-induced blackout at the time he traded in the early hours of 30 June.
Perkins has since stopped drinking and been to rehab, and his firm, PVM, lost about $10 million closing out the unauthorized trades, but there’s no recourse for consumers who may have paid higher prices for oil products as a result of drunken and unauthorized trades that drove up the market price for Brent crude oil. It’s not the first time we’ve heard of oil traders’ gaffes affecting oil prices and hurting consumers—sometimes mistakes in basic geography drive up prices, and just a year ago another oil trader in London got fined for trades he made after he got drunk at lunch, apparently something of a pattern in the London markets.
Perkins won’t be trading for at least five years—the FSA has banned him—but his case provides some insight into what people mean when they talk about the “complexity” of commodity markets.
Algae-Powered Plane Will Debut at Berlin Air Show
EADS’s algae-fueled plane will be making its first public appearance this week in Berlin. (image: eads.com)
The first airplane to fly on a 100-percent algae fuel will take to the air in Berlin this week, reported the news service AFP. EADS, a European aerospace conglomerate that operates Airbus and other aviation subsidiaries, has developed a plane that will run on pure algae-based biofuel and will be showing it off at the Berlin Air Show (ILA) that runs from June 9 to June 13.
The company’s technical director, Jean Botti, said that this is an unprecedented achievement:
At the ILA, we are going to fly for the first time a craft with biofuel that has been made 100 per cent from algae. That is a world premiere.
According to EADS promotional material, the algae biofuel has higher energy content than conventional jet fuel and causes no change in performance.
EADS’s demonstration will be the latest example of algae’s potential as a liquid fuel source with applications not just in airplanes but in diesel engines and home oil heating systems. But despite EADS work on alternative fuels, Botti does not believe algae-based fuels will eliminate the need for petroleum fuels in aviation anytime soon: “If 10 per cent of our fleet is flying with biofuel in 2040, I would be extremely happy.”
Heating Oil Thieves Foiled by Guinness, an English Police Dog
Heating oil thieves in England underestimated the ability of one police dog, and were found five miles away from the scene of the crime. (actual dog in question not pictured) (image: wikipedia.org)
Spaldwick is a small village in England, with a little over 500 residents, “a service station, a school, a church, a beauty salon and a pub.” That doesn’t mean it’s free of troubles, though. Local constables recently arrested four people for the theft of domestic heating oil, and are now holding them in the police station of the nearby town of Huntingdon.
But they couldn’t have done it without the help of their trusted police dog, Guinness. A burglary was reported just before 4:00 am, and while officers searched the area—finding two of the suspected culprits in a van—Guinness picked up a scent and led his handler some five miles away to the village of Brington, where the final two suspects were caught. Town & Crier, a local newspaper, reported Guinness’ triumph on Friday.
In sum, three men and one woman were arrested and two vans, replete with oil tanks and pumps, were seized.
Perhaps Guinness heard of the heating oil theft that occurred at an animal shelter in Pennsylvania this January, which subjected already vulnerable cats and dogs to chilly temperatures, and took a special interest in this crime. Unfortunately, that shelter in Pennsylvania did not have a valiant police dog such as Guinness to find the perpetrator.
So whether you prefer the adult beverage or the defender of justice, heating oil users have another reason to say, “Guinness is good for you.”
(image: recreatingtampa.com)
Total’s Strike Ends, French Refineries Resume Work
Workers continue to strike at Total’s refinery in Flanders, but the walkout ends at all other plants. (image: france24.com)
Workers at five of Total’s six refineries in France voted to end their weeklong strike on Wednesday, allowing shipments and oil processing to resume, reports Bloomberg. Total, the French oil major, planned to permanently close one of its refineries, precipitating the strike, but unions advised workers to end the walkout after Total promised that no other refineries would be closed or sold in the next five years and that refinery workers at the closed plant would find other work within the company.
At the refinery in Flanders, near Dunkirk—the refinery Total plans to close—workers voted to continue the strike until March 8, when Total will present its plans for the future of the plant. Total still intends to close the Flanders refinery, but has said it will build a training center at the site and restructure jobs to keep refinery workers employed with Total. The Flanders refinery has been idle since September, so the continuation of the strike there will not affect oil production.
Total said it would take between two or three days for output to resume, but a representative for the CGT, a French labor confederation, said at Total’s Donges refinery that the plant had tanks full of refined products that were ready to be shipped, according to the AFP. This will help ease fuel shortages in France, where Hundreds of gas stations have run out of fuel due to the strike.
While the walkout has ended, the CGT’s labor coordinator with Total, Charles Foulard, warned Total that “if it doesn’t keep its promises there will be another strike with fuel shortages.”
Russia and Belarus Reach Impasse in Oil Talks
The Druzhba pipeline system near Mozyr, Belarus. (image: Bymedia.net via rferl.org)
BusinessWeek reported on Friday that talks between Russia and Belarus over an oil imports dispute have ended with the Belarusian delegation walking out. The issue at hand concerns the Druzhba pipeline, which carries Russian oil from Siberia to the European Union across Belarus. The former Soviet state receives about 20 million metric tons of crude from Russia annually, only a quarter of which is used in Belarus, with the rest continuing on to the EU. Until December 31 Belarus enjoyed a 65-percent price discount on those supplies, but now Russia is asking Belarus to fork over full import duties, a change of about $5 billion, or 10 percent of Belarus’s GDP.
Thus far there have been no extended, wholesale shutdowns in the oil supply, a tactic that Russia has exercised in the past in disputes over natural gas with Ukraine, but the continued stalemate doesn’t bode well for oil prices. The spike that started off the new year with crude at $81 per barrel was linked, in part, to anxiety over reports of the dispute. A shutdown of the pipeline would affect not only Belarus, but a large swath of Eastern and Central Europe: Germany receives 15 percent of its oil from the Druzhba, the Czech Republic 50 percent, and Poland, Slovakia, and Hungary 75 percent or more.
Literally Singing the Praises of Gazprom
With the days of socialist marches and propaganda posters fading away, it seems that Russia has found a new way to whip up nationalist pride: an epic anthem extolling the virtues of the national gas company, Gazprom. In a YouTube video that can be described as inspiring, strange, comical, infectious and frightening (or all of the above), Gazprom presents its new theme song in music video form with English subtitles.
Sure, natural gas is an important commodity that’s “giving people warmth and light for office and for home,” but does it deserve three and a half minutes of exultation that borders on religious fanaticism? It’s clear that natural gas is one of the main (if not the most important) factors that maintain Russia’s political relevance in our global society, as then-president Putin showed when he cut off Russia’s gas supply to the Ukraine in the dead of winter last year.
Crucial domestic resource, chief export, invaluable revenue source, political weapon…you can see why the Russians love their gas. However, I doubt average Russians share the unconditional love and reverence for Gazprom that the anthem expresses, or if the song is even known in the country (or anywhere outside the snickering group of 67,950 YouTube viewers), but I do know that they’ll “never ever find a surer friend than Gazprom.”
So pour yourself vodka straight up so we can “drink to all the Russian gas, that it never comes to an end, though it’s so hard to obtain!”
embedded by Embedded Video
Heating Oil in Sea Storage Headed for the Northeast
Contango: a word that sounds much more exciting that it actually is. (image: Aphex Puddle via flickr.com)
Contango describes a futures market situation in which prices for future delivery of a commodity are higher than prices for immediate delivery. And contango has been present in the crude and heating oil markets for the last few months.
Since late 2008, investors have been working toward cashing in on the contango in the heating oil market. At that time, investors bought up cheap heating oil and put it in storage on huge tanker ships. The tankers then docked at locations around the world and waited for heating oil demand, and heating oil prices, to grow. This week, that time is at hand.
Russia’s Fight with Belarus Threatens European Oil Supplies
This oil depot in Belarus is along the Druzhba pipeline that carries Russian oil to Europe. (image: nytimes.com)
Tensions are high between Russia and the former Soviet republic of Belarus, the Wall Street Journal reported Tuesday, with Belarus threatening to cut off electricity to Russia’s westernmost region.
Belarus raised the stakes in an energy dispute that threatens midwinter disruptions for a pipeline system that supplies about 10 percent of the EU’s oil. Russia recently throttled back on supplies through the Druzhba pipeline, the main route for Siberian oil, after a pricing deal expired on December 31. The core of the dispute rests on Russia’s imposition of a new tax structure on the oil that Belarus siphons from the Druzhba line for refining. The demands could cost Belarus an estimated $5 billion this year, more than 10 percent of its GDP.
Heating Oil Price Trend for January 5: +8¢
(image: s.wsj.net and zimbio.com)
A variety of factors combined to produce yesterday’s price spike in crude and heating oil. Sustained cold weather in the US Northeast and in Europe, two large heating oil markets, has encouraged some investors that the fundamentals—supply and demand—of the oil market are improving as freezing temperatures boost heating oil consumption. Positive manufacturing reports from the US, China, and India signaled that those economies were recovering, which would raise global energy demand and support higher oil prices. Lastly, a tariff dispute between Russia and Belarus led Russia to briefly stop its oil shipments to Belarus, through which Russia supplies much of Europe’s oil. Russian exports have returned to normal, but the threat to the global oil supply worried investors and lifted oil prices.
Today’s average retail heating oil price in the Northeast is 8 cents higher than Monday’s average price.
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