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.
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.
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.
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
LIHEAP Funding Cuts Announced
Home heating oil customers on fixed incomes who have relied on federal heating aid face cuts as part of a $1 trillion federal budget package. (image: needhamoil.com)
The US House has approved a $1.2 billion cut to the federal home heating aid program despite staunch protests by lawmakers across the oil-reliant Northeast.
The cut was signed off on Friday as part of a $1 trillion-plus last minute spending package to avert a government shutdown, wptz.com reported.
The move reduces the amount of funding available for the Low Income Home Energy Assistance Program (LIHEAP) from $4.7 billion last year to $3.5 billion – a 25 percent reduction.
It comes amid spiralling heating oil prices and fears vulnerable residents on fixed incomes will be forced to choose between food and heating their homes this winter. Though the heating season has had a mild start, temperatures are expected to plummet. Millions of households in the Northeast which rely on fuel oil as their primary heating source are expected to be worst hit.
The $1.2 billion cut is about half that that originally proposed by the Obama Administration. But agencies who deal with heating aid requests say applications for the program are already up on last year as the recession bites and folks struggle to find jobs and balance their budgets.
Lawmakers across the Northeast have rallied in a bid to prevent fuel aid cuts. A group of senators introduced a new bill designed to stave off the cuts and hold LIHEAP funding at last year’s level to prevent the poor and elderly going cold.
Heating oil dealers have also been campaigning for the program’s funding to be maintained. As oil dealers visit homeowners to refill their tanks, they know first-hand the struggle facing many families just to survive.
The state of Vermont’s will get $19.5 million in federal heating aid this winter, down from $26 million last year. Senators Patrick Leahy and Bernie Sanders and Rep. Peter Welch said the funding cut would cause hardships for many Vermonters. They vowed to keep fighting for more aid, boston.news reported.
“The relentless budget battles in Washington are taking their toll on those who can least afford it,” the lawmakers said in a joint statement.
Connecticut Gov. Dannel P. Malloy said it would be difficult, given his state’s tight budget, to cover the reduction. Last winter, the state spent $115 million in aid and now expects to receive $79.5 million under the federal spending package.
The average family will pay $3300 to heat the home with oil this winter in New England, according to the National Energy Assistance Directors’ Association. That’s about $500 more than last winter. About half of the region’s homes use oil heat, the group said.
Meanwhile, best-selling author Stephen King’s efforts to raise money for low income Maine residents to heat their homes this winter have exceeded expectations – generating $240,000. The internationally-acclaimed horror writer said he was grateful to everyone who had contributed to help keep vulnerable people on fixed incomes warm.
Oil Prices Tumble as Opec Boosts Output
Commodity market traders dumped oil contracts this week after OPEC announced increased production targets, sending heating oil prices lower. (image: traderscommunity.com)
Heating oil shed nearly 10 cents a gallon in its biggest one-day drop since August this week, offering a much needed reprieve to beleaguered homeowners.
Prices dropped to their lowest level since October 5 in frenzied commodity market trading, theaustralian.com reports. The selloff follows warmer than normal winter conditions in the heating oil stronghold Northeast of the US, which is eating into fuel oil demand.
Weekly distillate inventories, which include heating oil and diesel, were up 480,000 barrels in the last week on the warmer temperatures, Energy Information Administration figures show. The average residential heating oil price nationwide dipped 3 cents a gallon.
Crude oil prices also took a big hit this week, posting their biggest one-day drop in three months. Crude slid more than 5 percent, below $US95 a barrel, on growing worries about weak oil demand in the US and Europe.
Falling prices were accentuated when in dramatic scenes in Vienna, OPEC nations announced they were boosting oil output targets to 30 million barrels per day, Bloomberg reports. This brings production targets up to about the oil cartel’s actual current daily output and is the first change in OPEC production target in three years The previous daily limit, which didn’t include Iraq, was 24.845 million.
But it was a striking turnaround from the June OPEC meeting, which broke down when member states failed to agree to a production increase, despite mounting international pressure to do so to alleviate spiralling oil prices.
That meeting pitted price hawks Iran and Venezuela against the cartel’s biggest oil producer, Saudi Arabia. The Saudis later unilaterally boosted supply to meet global demand. But OPEC’s failure to reach agreement triggered a 60 million barrel strategic oil release coordinated by the International Energy Agency to help counter high prices.
Mild Weather Could Cut Fuel Oil Bills
Mild weather means heating oil prices could drop. But strong overseas demand for diesel is pushing fuel oil prices up. (image: topnews.in)
A warmer than normal start to the heating season is cutting into demand and means homeowners face lower than expected heating oil bills, the Energy Department says.
But the savings could be offset by strong international demand for diesel, a distillate similar to heating oil, which is pushing fuel oil prices up, nasdaq.com reports.
In its monthly Short Term Energy Outlook, the Energy Information Administration said this week that early winter temperatures were milder than last year’s. Heating degree days, a measure of heat fuel demand, had dropped more than expected in all US regions apart from the West. The EIA has therefore revised its forecast household oil use lower. The average home would use 650 gallons of heating oil this winter – down 4.1 percent on last year.
That will be welcome news in the Northeast, where heating oil is most commonly used as a primary heating source – though the EIA said the warmer temperatures would result in only a smaller price increase than that already predicted last month.
But because of strong global demand for diesel, average residential heating oil prices are still forecast to hit a record $3.82 a gallon – a 13 percent increase on last winter. In dollar terms, the average home will pay $2492 for heating oil this winter, up 8.4 percent from a year ago, the EIA said.
HeatingOil.com has previously reported that diesel is nearly identical to heating oil. As diesel futures are not traded on world commodities markets, heating oil is often traded as a proxy. When diesel is in high demand globally, investors will often buy heating oil futures in diesel’s place, pushing fuel oil prices up.
This leaves heating oil customers and dealers in a tough position, with little price reprieve in the current environment.
National distillate inventories have climbed in recent weeks, indicating tapering demand because of mild weather. But average residential heating oil prices are still nearly 70 cents a gallon higher than they were a year ago, with further increases likely when the cold weather kicks in.
Hunger Strike Over Heating Oil Cuts
A Romanian mayor is so incensed at cuts to winter heating oil subsidies he has gone on hunger strike on behalf of the people who face freezing temperatures of minus 22 degrees. (image: goeasteurope.about.com)
A Romanian mayor has gone on hunger strike in protest at cuts to government heating oil subsidies.
Brad mayor Florin Cazacu, 46, refused to eat for six days in support of the town’s residents, who face freezing temperatures this winter of -22 degrees, dailynews.com reported.
As part of an austerity measures package to satisfy the International Monetary Fund, Romania has promised to scrap government subsidies for centralised heating. It has also cut salaries and increased a value added tax to one of the highest levels in Europe to help balance the books. The government must also liberalise its gas and power market in stages by 2015.
The heat subsidy cuts follow similar moves here in the US to address the federal government’s massive deficit. The Obama administration has proposed slashing the Low Income Home Energy Assistance Program (LIHEAP) by billions of dollars this winter to help reduce costs. But the proposal has sparked fears for thousands of vulnerable Americans who rely on heat fuel subsidies to stay warm when temperatures plunge below freezing.
The Romanian government’s decision to scrap the heating subsidy left Brad with a three million lei (US$912,500) shortfall in heat aid funds. Faced with the prospect of his citizens not being able to afford to stay warm this winter, Cazacu refused food to draw attention the people’s plight.
And on Friday the Government offered a compromise of sorts, announcing it would give Brad one million lei, which Cazacu said was a good start, but still not enough.
“The funds will ensure there is enough fuel oil for a period of 15 days, but let’s not forget winter is just starting,” Cazacu told the Agerpres news agency.
Cazacu abandoned his hunger strike late last week on the advice of colleagues after being rushed to hospital feeling sick.
“I confess that my health has deteriorated.”
Cazacu said he would keep pressuring the government to supply 2500 tonnes of fuel oil from state reserves to ensure Brad had enough heating fuel for the entire winter season.
Meanwhile, US agencies who divvy out fuel aid assistance warn resources are already stretched. They are hoping more LIHEAP funding will be released, with average residential heating oil prices tipped to hit their highest levels on record this winter.
High Oil Prices “Strangling” Recovery
IEA chief economist Fatih Birol has sounded a warning about the effect of high oil prices on the world economy and hinted that OPEC oil producers should boost supply. (image: abc.net.au)
An international oil consumer watchdog is warning that high oil prices risk strangling the global economic recovery and hinted that OPEC should boost production.
The International Energy Agency’s chief economist Fatih Birol said Thursday the world economy was more fragile now than during the 2008-09 crisis, when oil prices were lower.
“I believe oil prices are well-positioned today to strangle the economic recovery efforts,” he told Reuters in Vienna.
West Texas Intermediate crude is hovering near the $100 a barrel mark and residential heating oil prices are already about 80 cents a gallon higher than they were 12 months ago.
Prices were supported last week by bigger than expected draws in US oil reserves, cooler temperatures and international sanctions on Middle Eastern oil producer Iran.
Birol said Europe was especially at risk from the high oil price, but that it could also turn into a major problem for energy-hungry Asia.
“It is a major risk for the slowdown [of] the economic growth in Asian countries which were the countries which brought us out of the financial crisis in 2008. If we don’t have their strength this time it will be much more difficult to go out of this financial crisis.”
The IEA represents 28 industrialised, oil-importing countries and overseas those nations’ strategic petroleum reserves. Earlier this year it coordinated just the third reserve oil release since 1974 in response to persistently high world oil prices and failure by OPEC nations to approve a production increase at its June meeting in Vienna.
OPEC nations will meet again next month and there is growing pressure for the oil producers’ cartel to boost supply so high oil prices don’t crimp the faltering economic recovery. US heating oil customers face record prices this winter as oil costs soar and cuts to federal heating aid assistance. But OPEC has already signaled it sees no need to release any extra oil to the markets, saying supply and demand was “balanced” and “comfortable”.
However, the IEA insists that prices are damaging the economy. Asked whether the oil-producing bloc should increase production because of the danger to the global economy, Birol said it was up to OPEC.
“I hope that colleagues from the producing countries are also looking at the market indicators carefully, including the diminishing OECD stocks levels and the fragility of the global economic situation and make their decisions by taking into account all of these indicators,” he said. ”I think the producing countries also need clients with healthy economies.”
Maine Oil Dealers Issue Warning to Governor
Maine governor Paul LePage wants to slash the state's heating use in half by 2014. The proposal has sparked concerns among heating oil dealers whose livelihoods could be threatened by the move. (image: blogspot.com)
Heating oil dealers have hit back at proposals by Maine Governor Paul LePage to slash the state’s reliance on fuel oil by 2014.
Maine is the nation’s leading heating oil state, with around 80 percent of its homes reliant on fuel oil as a primary heating source. But LePage wants to cut Maine’s heating oil consumption in half to around 40 percent and expand the use of natural gas.
The proposal reflects volatility in world oil prices and the drain high heating oil costs are creating on state finances and home budgets.
The Maine Energy Marketers Association (MEMA) recently met with LePage to discuss his proposal. sunjournal.com reports.
Lawmakers and energy analysts have questioned whether LePage’s goal is realistic, saying the initiative faces long odds. It would require costly new infrastructure development, gas piping to feed those not currently served by natural gas networks and home conversions.
MEMA president and chief executive Jamie Py said his group was concerned that LePage was favoring an in-vogue energy source at the expense of established oil dealers that had served the state’s residents diligently for decades.
A MEMA statement said it had taken “offense that our free-market governor would be encouraging the state to pick winners and losers in the energy market.” The group asked LePage to tread carefully when making statements about converting homes and businesses from oil to natural gas. Such rhetoric was “detrimental to our businesses and our customers.”
A spokeswoman for LePage, said oil dealers’ concerns were understandable. The governor was encouraged that MEMA wanted to help promote energy efficiency. However, LePage was committed to giving consumers more energy choices. He believed the market would move away from oil and seek cheaper alternatives because it was too costly.
Py acknowledged oil prices were currently at high levels but said the governor should be wary of betting too heavily on natural-gas expansion.
“We understand that natural gas is less expensive at the moment. But those commodities bets are wrought with risk.”
The state is also understood to be considering the purchase of hydro electricity generated in Canada to meet its future energy needs. Drafting a new energy policy has been a priority for the governor, who believes lowering costs is critical to luring businesses to Maine. LePage hopes to unveil an energy bill next session.
Vermont Fuel Dealers Pledge Free Heating Oil
Heating oil dealers in Vermont are raising money to provide vital fuel oil supplies to low income families this winter. And they need your help. (image: examiner.com)
Vermont heating oil dealers are appealing for community donations to help ensure vulnerable families don’t go cold this winter.
In a program called Split the Ticket, the state’s fuel oil dealers are again donating free oil, kerosene or propane to folks who may otherwise struggle to pay their bills. Those pledged gallons are then matched with donations from the community to ensure those who need it most don’t miss out on heating fuel because of high costs when temperatures plummet.
Vermont fuel dealers, along with local businesses and organizations, donated 6000 gallons of free heating oil through the scheme last winter, vtdigger.org reported.
The Vermont Fuel Dealers Association said it hoped the public would sign up to the fuel assistance program again this year.
“Vermont’s heating fuel dealers are mostly small, family-owned businesses that live in the same community where they work. They know about the father in the military and his struggle to pay the bills while fighting overseas. They know about an unfortunate accident or illness that will make it tough for someone to heat their home.
“They know how the recession is impacting their community and who is having trouble making ends meet. Heating fuel dealers see the need first-hand and are often the first to respond in a crisis, especially when the family is unaware or unable to receive government assistance – or is simply too proud to ask for help from others.”
Average residential heating oil prices are already 82 cents a gallon more than they were 12 months ago and the US Energy Information Administration expects prices to rise further this winter.
But low income families are facing a double whammy because of cuts to the federal fuel aid scheme Low Income Home Energy Assistance Program (LIHEAP), which looks set to be slashed in half as the government wrestles with a debt blowout.
That means the neediest households that relied on federal assistance to stay warm last winter could face severe hardship without support from Split the Ticket, or similar schemes in other Northeast states.
So please consider donating to the association’s program and sign up today! Click here to download a pledge form.
Stephen King Offers Heating Oil Aid
Renowned horror writer Stephen King is raising money for heating oil so low income families in his Maine home town are not forced to endure the freezing winter without heating fuel. (image: guardian.co.uk)
International horror writer Stephen King is raising money to prevent low-income Maine households that rely on heating oil going cold this winter.
The best-selling author has penned classic hair-raisers such as Misery and The Shining. He is trying to raise $70,000 through several radio stations he owns to buy heating oil for vulnerable Mainers in Bangor as federal heating assistance cuts start to bite. The native Mainer will double the amount raised up to $140,000.
“This economy is terrible and [wife] Tabitha and I both worry so much about Bangor because it truly is a working-class town and we are always looking for ways to help, and right now this is a great need,” King told the Bangor Daily News this week.
“And on top of it the price of fuel continues to rise. The cost goes up, the need goes up and the assistance goes down. That’s the bottom line. That’s what is happening.”
The Federal Government has announced sweeping cuts to the Low Income Home Energy Assistance Program (LIHEAP), slashing the $5 billion heat aid fund by more than half in a drive to reduce the federal deficit.
The Maine State Housing Authority has been told to expect $23 million in heating oil assistance this winter, down from $55.6 million last year. The situation is similar across the Northeast states, where millions of homes rely on heating oil for warmth during the harsh heating season.
But the Energy Information Administration is forecasting the highest average residential heating oil prices on record this winter. There are fears spiking prices combined with high rates of unemployment across the US and a faltering economy, there will see record numbers of struggling families seeking heat aid assistance.
King grew up in Bangor Maine, where the average winter temperature hovers around freezing.
He now spends the cold winter months in Florida. But he returns with his wife to Bangor and a home in Center Lovell.
The heating oil assistance is being raised through his Stephen and Tabitha King Charitable Foundation.
The Bangor News reported that people were “desperate to find help to fill their oil tanks.” The State governor plans to seek funds to fill the gap from the Maine Legislature.
Pennsylvania LIHEAP Cuts Announced
Pennsylvania has slashed the amount of fuel aid it will dish out this winter in the face of expected cuts to the federal heating assistance programe, pittsburglive.com reports.
“It’s going to be really tough,” Allegheny Valley Association of Churches executive director Karen Snair said. “There’s going to be a lot of people in need who are not going to get the help they need.”
The Obama administration has signalled it will cut the Low Income Home Energy Assistance Program (LIHEAP) this heating season by half to $2.5 billion.
But with average residential heating oil prices forecast to hit their highest ever levels this winter, there are fears for those homeowners on low or fixed incomes.
LIHEAP provides grants for home heating so people who are struggling to pay don’t have to go cold once temperatures dip. Volatile heating oil prices in recent years have seen the number of homeowners applying for the fuel aid program spike.
Many states have been campaigning for LIHEAP funding to remain unchanged to protect the most vulnerable residents.
In response to federal funding cuts, Pennsylvania has lowered the amount of aid it will dish out and the maximum amount of money people can earn to qualify for heating assistance, Department of Welfare spokeswoman Carey Miller said.
The income limit to receive aid has been cut from $17,328 to $16,335 for one person. For two people, the limit is $22,065, down from $23,312. The state has also reduced the minimum cash benefit recipients can get to $100, down from $300 last year – and crisis grants have been lowered from $400 to $300. The money goes directly to utility companies.
The changes to aid and income limits aimed “to stretch the dollars so that we can service as many people that we possibly can,” Miller said. “All states are really struggling with this.”
Pennsylvania got $326 million in federal LIHEAP funding last year. This year, it expects to receive just $163 million, Miller said.
Nearly 75,000 households received cash assistance or crisis grants last year. A similar number of applications are expected this winter.
But with high unemployment and little prospect of work for many people, there are fears that aid application numbers will rise.
Adams Petroleum in Ohio Township vice president Mike Adams said with higher average fuel bills expected, the money would not go as far.
“We have a lot of heating oil customers on heating assistance,” he said. “A lot of them are elderly and on fixed incomes. My heart goes out to them.”
Demand Tanks for Pre-Paid Heating Oil Contracts
Average residential heating oil prices are tipped to hit their highest ever level this winter. Volatility in prices is sending rates of pre-paid heating oil contracts to record lows. (image: bloomberg.com)
The number of Northeast homeowner buying pre-paid heating oil contracts has fallen dramatically and is forecast to hit its lowest level in five years.
Millions of US homes rely on heating oil for warmth, about 80 percent of them in the Northeast region. The Energy Information Administration says about one third of Northeast heating oil customers have traditionally opted to lock in prices for the entire winter with pre-paid oil contracts. The number jumped to nearly 50 percent during 2008 when prices rocketed up on the back of spirally crude oil costs.
But many of those customers lost money when oil prices collapsed later that year, leaving homeowners out of pocket because they had already locked in much higher prices.
“After petroleum prices collapsed during the second half of 2008, so did the percentage of homeowners with supply contracts the following two winters, with estimated participation sinking to about 25 percent in both 2009 and 2010,” the EIA said. “For this winter the number is expected to be even lower.”
Northeast heating oil dealers say the number of customers opting for pre-paid oil contracts may be at its lowest level in five years. Oil market volatility is blamed for the low take-up rate. Numerous reports of oil firms going bust during the recession owing thousands of customers for pre-paid oil that was never delivered is also likely to have affected take-up numbers.
The EIA predicts average retail heating oil prices will hit their highest ever level this winter, mainly because of volatility in world crude oil markets. Retail home heating oil in the Northeast was selling for an average of $3.82 per gallon by the middle of October – up 27 percent on a year earlier, the EIA said.
As reported previously on HeatingOil.com, some heating oil dealers are now refusing to offer pre-paid contracts for fear prices will collapse again, leaving their customers unhappy. Many are instead simply offering cash on delivery at the day’s going rate.
The alternative is a capped-rate contract, where a maximum limit is set on the amount consumers will pay per gallon, but they pay less if prices fall.
Connecticut firm Arctic Oil has offered pre-paid heating oil contracts since 1993, but ditched the fixed plans this year, courant.com reported.
“The price of oil is so high right now, we’d hate to lock in prices and have them go down a dollar a gallon,” company owner George Zakreta said.
Klingner Family Oil in Farmington stopped offering lock-in plans two years ago.
“Prices have been too volatile the last two years,” said Karina Klingner, a company owner. “We offer a budget program that extends payments over 10 months and a regular C.O.D.”
Eugene Guilford, executive director of the Independent Connecticut Petroleum Association, said fewer distributors were offering lock-in contracts because consumer demand for the plans had declined.
“Demand has been down because people are more cautious about locking in. If you buy it you own it.”
