New Jersey Joins Low-Sulfur Heating Oil Club
Clear skies like these over Jersey City, NJ will likely become more common following the enactment of new rules requiring lower sulfur content in heating oil. (image: treehugger.com)
New Jersey enacted low-sulfur heating oil mandates on Tuesday, becoming the fourth Northeastern state to require cleaner-burning heating oil. The state’s Department of Environmental Protection (DEP), which began considering the new rules in January, announced their official adoption with a statement from DEP commissioner Bob Martin, NorthJersey.com reported.
Martin said that the rules will make New Jersey “a much healthier place to live,” by establishing a “strict but reasonable time frame to allow industry to be able to install new equipment and prepare to meet these standards.” The rules require heating oil to contain no more than 500 parts per million (ppm) of sulfur by July 2014 and 15 ppm by July 2016. Current regulations allow sulfur content of up to 2,000 ppm. The rules will apply not only to heating oil sold to residential customers, but also to refineries that make heating oil for sales in other states, helping to spread cleaner-burning heating oil throughout the region. The new regulations will also help the state comply with federal clean air requirements that it has violated.
According to government analysis, the regulations could drive up the price of heating oil by up to nine cents per gallon, but those cost increases will be offset in the long run by savings on cleaning and maintenance of oil-fired heating systems. Low-sulfur fuel burns more efficiently and places less strain on boilers and furnaces. Like its counterparts in Maine, Connecticut, and New York, the New Jersey heating oil industry supported the low-sulfur mandates early on and was involved in crafting the specific rules and implementation time frame. Scott Ross, associate director of the New Jersey Petroleum Council representative told NorthJersey.com,
It’s a reasonable time frame to meet the demand needs. We participated in the rule-making process, which began with the last administration, and we’re fairly happy with the outcome.
According to the DEP, low-sulfur requirements will make heating oil emissions equivalent to those generated by burning natural gas. Reduced sulfur emissions will also save the state millions in medical costs by decreasing the need to treat asthma and other respiratory problems caused by low air quality.
New Jersey’s move to clean up heating oil emissions is just the latest sign of the times for the heating oil industry: a cleaner, greener fuel is required to secure heating oil’s status as a staple heating fuel in the Northeast. Lower-sulfur heating oil and biodiesel heating oil (commonly known as Bioheat) have obvious health and environmental benefits, and have been proven to improve the efficiency of most heating systems. Although not all Northeastern states have required cleaner heating oil yet, the industry is ready and eager to evolve to remain an important energy source in the greener world of the future.
NJ Non-Profit Offers Heating Oil Assistance to Middle-Income Residents
(image: njshares.org)
Many families around the nation rely on government assistance to pay their heating oil bills each winter. The federal program that provides that assistance, the Low-Income Home Energy Assistance Program (LIHEAP), generally works well but struggles more and more each year to meet the huge demand from needy families. To fill the assistance gap, local, state, and national charities step up with private funds to help those in need stay warm during the cold season. An important service many of these generous organizations provide is giving financial assistance to people in need of help who don’t qualify for HEAP funds because of their income (visit the HEAP website to see requirements for each state).
One New Jersey organization focuses on helping just those types of families and individuals. NJ Shares is a non-profit that provides grants to help middle-income families ineligible for HEAP funds pay their heating oil and other utility bills. It does so by working with dozens of government officials and local charities throughout New Jersey. The group’s focus is on New Jersey residents in the midst of a financial crisis that need temporary help.
Writing on the news site Daily Record.com on Tuesday, New Jersey AARP president Sy Larson reminded residents that NJ Shares can help those in danger of losing heat in the coming fall and winter.
If you are a New Jersey resident who may need help from NJ Shares in the next few months, you can apply for assistance by calling 1-866-NJSHARES or by visiting the organization’s Where to Apply page.
Others who may not need assistance by are interested in supporting this worthy organization can donate at the How You can Help page.
Opponents Outnumber Supporters at NYC Hydrofracking Meeting
The BMCC lecture hall was full to capacity for the City Council's town meeting on hydrofracking on Tuesday night. (image: Nicholas Whitaker for HeatingOil.com)
On Tuesday night, the New York City Council held a public “town meeting” to solicit citizens’ views on the subject of hydraulic fracturing, the controversial oil and gas drilling method known as hydrofracking. The meeting, held at the Borough of Manhattan Community College, allowed city residents two minutes each to express their views on hydrofracking and proposed regulations. City Council Speaker Christine Quinn and Councilman Jim Gennaro presided over the meeting, and a handful of other representatives from city government were in attendance as well. Also at the meeting were two representatives of the federal Environmental Protection Agency (EPA), which is currently undertaking a comprehensive nationwide study of the practice to gain a better understand of its effects on the environment surrounding drilling sites.
From the opening moments of the meeting, it was clear that the majority of city politicians and bureaucrats, as well as the approximately 200 citizens in attendance, were there to oppose the use of hydrofracking in New York City’s watershed. Speaker Quinn kicked off the meeting with kudos for her fellow council members and state lawmakers for their willingness to enact moratoriums on hydrofracking. Quinn stated that the purpose of the meeting was to collect testimony from New York City residents (who would be “directly affected” by hydrofracking) that would be submitted to the EPA, as the agency had not planned a hearing in the city as part of their nationwide hydrofracking study. Quinn included a mention of industry opposition to hydrofracking regulation, saying that the natural gas industry, “As [State Senator Liz Krueger] can tell you, has pumped a lot of money into Albany.” Councilman Jim Gennaro, who took over the meeting after Quinn’s introduction, also made clear his opposition to hydrofracking at the outset, declaring his intention to “bring some sanity” to the drilling method.
A one-page leaflet distributed by the City Council offered a basic explanation of hydrofracking.
Numerous speakers referred to hydrofracking as “the most important environmental issue in New York State,” and most focused on its threat to drinking water—rightly so, as no gas drilling would ever take place in New York City, but in the Catskill Watershed that supplies the city with its unfiltered drinking water. In addition to the health risks posed by chemical contamination of drinking water, many speakers touched on the financial burden of building and operating a filtration plant to ensure clean water in the event of contamination. Councilman Oliver Koppell, who worked on water issues as a state assemblyman, estimated the cost of building such a plant at $20 billion. Filmmaker Josh Fox, the director of the recently released hydrofracking documentary Gasland, expanded his opposition to hydrofracking beyond water concerns, demanding that regulators also look into effects of the process on air and soil quality. To raucous applause, Fox urged citizens to demand the closing of loopholes in key environmental regulations the Clean Water Act, the Clean Air Act, and the Superfund Law that specifically exempt hydrofracking from their provisions. Fox also called for federal regulators to be present full-time at sites with more than 100 gas wells to ensure drilling is carried out safely.
Filmmaker Josh Fox speaks to the Council as attendees look on. Fox called for tighter federal regulation of hydrofracking. (image: Nicholas Whitaker for HeaitngOil.com)
Despite a palpable anti-hydrofracking air in at the meeting, two proponents of expanded gas drilling and hydrofracking did speak. The first was Ray Olson, a representative of landowners from Windham, NY, a town located in the Catskill watershed that holds potential for gas extraction. Clearly sensing that he was in unfriendly territory, Olson took a combative tone, beginning with a correction of “misstatements” made by council members. “There are a million acres in the watershed,” he stated defiantly, “900,000 of those are privately owned. It is not your watershed, and it is certainly not your water. It is ours.” Olson went on to describe the financial compensation offered by gas companies to landowners such as himself, and said that he stood to win initial payments (through land leasing and gas royalties) that total $5 million. “We will get our money one way or another,” he said, arguing that the city would have to pay watershed landowners for the rights to the water beneath their land—though that premise is highly questionable, as upstate residents are not currently compensated for the water used by New York City. Olson also took on the financial argument, saying that the $20 billion cost of a water filtration system would be “a bargain,” as it would create jobs and commerce in the city and state. This proclamation brought boos and jeers from the meeting attendees that were cut off by Councilman Gennaro’s gavel. In conclusion, Olson offered a third argument in favor of expanded drilling, declaring, “The opportunity for New York to become the first energy-independent state in the world is irresistible.” Another fracking defender, Brianne Murphy, took a more muted approach. Representing landowners in Broome County, Murphy argued that the interests of landowners are often overlooked, as the debate over fracking is frequently framed as one between environmentalists and the natural gas industry. She acknowledged the risks that hydrofracking poses to local residents, but also asserted, “we cannot allow fear-mongering and other unfounded, grossly exaggerated concerns to dictate policy.” She emphasized that correctly executed hydraulic fracturing has not been proven to threaten the safety of drinking water.
The least partisan statements of the evening came from Jennifer Grossman of the Open Spaces Institute, who brought a message of unity to her testimony. She sympathized with upstate landowners in economic distress what have to “make [the choice] of giving up their land or signing [gas drilling] leases. Her message was one of unity that ended with a call for citizens, environmental groups, and industry to work together at finding solutions to the problems posed by hydrofracking.
Because meeting attendees were largely opponents of hydrofracking, much of the statements made amounted to, as one speaker noted, “preaching to the choir.” What was clear at the meeting was that there is a segment of New York City residents that are informed and passionate about the hydrofracking debate. What was also clear is that New York City politicians (however personally interested in the issue they may or may not be) are eager to tap into the passion of those citizens and use it to boost their own professional profile and win votes.
The EPA is only in the sixth month of a two-year review, and the state moratorium on hydrofracking will expire in May of 2011, before which time it will almost certainly be reconsidered by the legislature. This of course means that the debate over hydrofracking is far from over, and there are many more community meetings and other events to be had, both inside and outside New York State.
NY Senate Passes Hydrofracking Ban
The Capitol building in Albany--the site of a rally urging legislators to pass a moratorium on hydrofracking three weeks ago--saw the Senate pass just such a moratorium on Wednesday. (image: Nicholas Whitcker for HeatingOil.com)
In a whirlwind session on Wednesday night the New York State Senate approved a moratorium on the controversial gas drilling technique known as hydraulic fracturing or hydrofracking. Local public radio station WNYC reported on Thursday that the measure passed by a vote of 48 to 9, with 15 yes votes coming from Republicans. Speaking to WNYC, ProPublica reporter Abrahm Lustgarten noted that the bill acknowledges the state Department of Environmental Conservation’s (DEC) pending review of hydraulic fracturing and “takes pressure off” of the agency by giving it more time to perform a thorough review of the technique.
The bill, S8129B, would suspend all permits for hydraulic fracturing in New York State until May 15, 2011. By that time, the DEC’s review will most likely be completed, and the state government will have collected and considered more information on the practice. The moratorium on hydrofracking would expire on May 15 of next year, and would have to be replaced by new legislation if the DEC, the State Legislature, and/or the Governor finds sufficient evidence that calls for closer oversight or an outright ban. According to the bill’s author, upstate Senator Antoine Thomson (D), its bipartisan passage stemmed from “noticeable effects” of hydrofracking on drinking water in Pennsylvania and concerns over the safety of oil and natural gas drilling intensified by the oil spill in the Gulf of Mexico. Hydrofracking, which involves injecting chemical-laden water deep underground at high pressures, is the suspected cause of water contamination and health problems at drilling sites around the country. However, drilling companies have repeatedly asserted that hydrofracking is safe and that no definitive scientific links have been established between the practice and water contamination.
The Senate’s passage of the bill marks a victory for New York’s anti-fracking activists, who staged a rally at the then-empty capitol building on July 20. The bill still requires approval by the Assembly and Governor David Paterson before it becomes law.
Another Indictment for Heating Assistance Fraud in New Jersey
Attorney General Paula Dow (center) and Criminal Justice Director Stephen Taylor (left) have indicted another heating assistance administrator for fraud. (image: nj.com)
In what’s becoming a familiar story, a local administrator of New Jersey’s Home Energy Assistance (HEA) program has been indicted for filing fraudulent applications to get benefits for herself and others. Denise Johnson was indicted on Wednesday, reported NewJerseyNewsroom.com, and follows in the footsteps of fellow HEA administrators Nicole Victor (indicted in May) and Constance Campbell (sentenced to five years in prison on July 19).
In a statement released by the Office of the Attorney General, New Jersey Attorney General Paula Dow said the latest indictment is the result of a lengthy investigation into corruption in the energy assistance program:
“This is the fourth case that we have filed in the last twelve months as a result of our ongoing investigations into fraud against the New Jersey Home Energy Assistance Program,” said Attorney General Dow. “By vigorously investigating and prosecuting these cases, we are working to prevent misappropriation of taxpayer dollars and ensure that program funds are used to heat the homes of vulnerable residents who are rightful beneficiaries of the program.”
The fourth case that Dow mentioned was that of Thomas Harris, a fuel supplier involved in the frauds perpetrated or allegedly perpetrated by the three HEA administrators. As the sole proprietor of Harris Fuel Oil, Harris offered cash for heating assistance checks instead of fuel. Harris would pay out in cash less than the value of the assistance checks, and has been sentenced to four years in prison after pleading guilty to defrauding the state of nearly $400,000.
Johnson allegedly stole $22,905 in assistance funds for her own benefit, and assisted her boyfriend, Anthony Lamont Taylor, and her half-brother, Vincent Lipsey, in filing false applications and receiving $2,648 each in program funds.
The latest indictment may not be the last. According to State Criminal Justice Director Stephen Taylor, investigations are still in progress:
Through the exemplary work of our investigators and attorneys, we are continuing to follow the evidence and build strong cases charging fraud against this program.
As New Jersey continues to investigate fraud within the HEA program, low-income New Jersey residents stand to benefit as more of the program’s funds go to their rightful recipients.
Mass. Program to Upgrade Heating Oil Systems for Low-Income Homeowners
The Massachusetts Oilheat Council (MOC) and Conservation Services Group (CSG) are teaming up to bring high-efficiency heating systems to hundreds of Massachusetts homes. (image: chimneysweepnews.blogspot.com and csgrp.com)
Five hundred homes in Massachusetts could get new, high-efficiency heating equipment through a new program aimed at heating oil users with low or moderate incomes. Conservation Services Group (CSG) and the Massachusetts Oilheat Council (MOC) announced that they had secured $1.7 million in federal stimulus funds for the Oil Heat Efficiency Program (OHEP).
OHEP will give rebates of up to $4,000 for energy-efficient boilers, furnaces, and water heaters. CSG and the MOC will work with the Massachusetts Low Income Energy Affordability Network (LEAN) to determine eligibility for the program. In addition to upgrading heating systems, OHEP provides for training dozens of heating oil technicians to become specialists in home energy efficiency.
Michael Ferrante, president of the MOC, explained how the program would benefit low-income heating oil consumers and the state of Massachusetts:
Many of the state’s homeowners with older, inefficient heating equipment are paying only the most essential bills in this tough economic climate, so upgrading their heating system may not be a priority. Fortunately, this innovative and timely program will enable hundreds of residents to reap the benefits of higher efficiency equipment. They’ll see their energy bills go down, because they’ll use less fuel without compromising comfort. This program is also a boost for the local economy because it provides work for oil heat retailers and their technicians, due to increased demand for equipment installations. We will also need to train qualified candidates to become energy auditors, leading to even more jobs.
Many states have adopted rebate programs to encourage people to upgrade to energy-efficient appliances and heating equipment, but OHEP is unique in offering a rebate large enough that it could cover the entire cost of a heating system upgrade. Add on the savings from lower heating costs, and this stimulus program will continue to keep money in the pockets of hundreds of Massachusetts homeowners for years to come.
Massachusetts heating oil users can contact their heating oil dealer or the MOC (800-722-0623) to find out more about OHEP and to determine their eligibility for the program.
Gov. Paterson Signs NY Low-Sulfur Heating Oil Mandate into Law
New York Governor David Paterson signed a low-sulfur heating oil requirement into law on Tuesday. (image: thegrio.com)
New York Governor David Paterson made official a new law mandating cleaner-burning heating oil in the state on Tuesday. The bill, passed by the state senate in June, requires all heating oil sold in New York to contain no more than 15 parts per million (ppm) of sulfur as of July 1, 2012. The requirement, similar to those recently enacted in heating oil-reliant Maine and Connecticut, has the support of public health advocates, environmental groups, and the heating oil industry in New York.
Supporters repeatedly cite the threefold benefits of low-sulfur heating oil: environmental and health benefits that come from fewer particulate emissions, more efficient operation of heating systems that saves consumers money by cutting oil consumption, and reduced maintenance costs. One Paterson administration official framed the bill’s passage as an important one for New Yorkers in a quote given to the New York Times’ Green blog:
“The bottom line? We’re saving lives,” said Peter Iwanowicz, the governor’s deputy secretary for the environment. “It’s a very big win for public health, the environment and the consumer.”
Opponents of the measure claim that it will drive up heating oil prices by forcing producers to make expensive changes in refining processes. Others say that, because 15 ppm is also the limit on sulfur content for road diesel, competition between diesel vehicles and residential heating systems for the same fuel will lead to tighter supplies that will push prices higher. Heating oil industry officials have dismissed these claims, pointing to the large quantities of low-sulfur diesel that US refiners export to Europe.
While the actual effect of the low-sulfur heating oil requirement will have on prices in New York and other Northeastern states remains to be seen, there is potential for tax policy in New York to significantly raise prices if legislative action is not taken. A statement from Governor Paterson’s office on the signing of the bill urged state legislators to amend it before it takes effect next year to ensure that it will not be taxed as an “enhanced diesel fuel.” Such a qualification would place a 40-cent-per-gallon tax on cleaner heating oil. The statement quoted Paterson as saying,
It is critical, however, that Legislators work to pass a chapter amendment this year that would ensure that tax exempt status of heating fuel oil is maintained. While the law does not take full effect until 2012, I will do everything in my power to ensure that homeowners are protected as quickly as possible, securing a shared win for the environment, homeowners and the health of all New Yorkers.
The passage of a new low-sulfur mandate appears to be good news for heating oil users and all New Yorkers. Assuming the tax issue is resolved by the legislature in the next two years, heating oil consumers have good reason to hope for significant savings in fuel and maintenance costs.
Rhode Island Reopens Heating Equipment Rebate Program
Rhode Islanders have a second chance at a $500 rebate on the purchase of an energy-efficient oil boiler like this Weil McLain Ultra Oil Boiler. (image: wetheadmedia.com)
When Rhode Island opened its rebate program for energy-efficient heating equipment and appliances on March 25, rebate funds lasted all of one day. Now the program is relaunching, giving Rhode Islanders another chance to save up to $500 on the purchase of Energy Star-approved heating equipment or appliances.
Rebates range from $100 to $500, with the $500 rebates reserved for oil and gas boilers. Oil and gas furnaces are eligible for $100 rebates. Select dishwashers, refrigerators, freezers, and gas-fired water heaters also qualify for a rebate.
Purchases made on or after March 25 are eligible for the rebate, which Rhode Island residents can apply for at the website of the Rhode Island Energy Efficient Rebate Program. But Rhode Islanders should act fast if they want to secure their rebate. Funds are distributed on a first-come, first-serve basis, and the program only has about half the money that it had in March—$442,000 instead of $882,000.
There is still $430,950 left, but that amount is dwindling. If you want some help to upgrade your heating system, apply for your rebate now!
NJ Heating Assistance Administrator Gets Five-Year Prison Sentence for Fraud
Campbell was sentenced to five years in prison for stealing $24,000 from New Jersey’s low-income energy assistance program. (image: guardian.co.uk)
Constance Campbell, a local manager of New Jersey’s Home Energy Assistance (HEA) Program, siphoned $24,000 in state funds away from low-income households in need and took it for herself and five family members. All pleaded guilty, and the punishments for Campbell’s relatives ranged from probation and restitution to one year in jail. On Monday the New Jersey Superior Court sentenced Campbell to five years in prison for her role as the ringleader in the scheme to defraud the heating assistance program, reported the news site NJ.com.
Campbell wasn’t the only HEA administrator to steal from the program. Nicole Victor was indicted in May for stealing from the assistance program, and on Monday pleaded guilty to official misconduct, the same charge leveled against Campbell. Victor has now admitted to stealing nearly $12,000 and also faces a possible five-year sentence. If Campbell’s case is any clue, then Victor is likely to be sentenced to the full five years.
Said Attorney General Paula Dow:
These defendants had a duty to honestly administer the heating assistance program, but they instead devised schemes to defraud it. These cases send a strong message that we will aggressively prosecute those who abuse public positions for personal gain.
New Jersey’s investigation into heating assistance fraud has also uncovered a heating oil supplier who helped both Campbell and Victor perpetrate their crimes. Thomas Harris of Harris Fuel Oil illegally gave out cash in exchange for heating assistance checks instead of heating fuel. Harris would give less cash than the assistance checks were worth, and then pocket them for himself in the full amount. He did this for many legitimate HEA beneficiaries, but also worked with the fraudulent HEA administrators. In June Harris was sentenced to four years in prison.
Stephen Taylor, director of the state’s Division of Criminal Justice, hoped that their efforts would quell corruption in the HEA Program and let state money reach those who need it: “Through prosecutions such as these, we are working to deter the type of fraud that drives up the cost of public assistance programs.”
Like most states, New Jersey is strapped for cash and its energy assistance program is stretched thin by strong demand. Any money taken from the program is money taken out of the pockets of families struggling to stay warm in the winter.
PA Low-Sulfur Heating Oil Regulation Would Save Consumers $86 Million
Sunoco’s refinery in Marcus Hook, PA, where low-sulfur heating oil is already the norm. (image: skyscrapercity.com)
Pennsylvania’s Environmental Quality Board (EQB) approved a new regulation on July 13 that could save heating oil users a bundle. The regulation would require all home heating oil to have a maximum sulfur content of 15 parts per million (ppm), creating a cleaner fuel that would eliminate the need for $86 million in maintenance on heating systems every year, reports the news site NorthcentralPA.com.
The rule would go into effect in May 2011 and apply to all heating oil sold in Pennsylvania. The regulation would bring the sulfur specifications for heating oil in line with those for ultra low-sulfur diesel fuel, which refiners have been producing since 2009. At Sunoco’s oil refinery in Marcus Hook, PA, all diesel and heating oil is already produced with a sulfur content of 15 ppm or lower.
Pennsylvania’s legislature is working on a similar proposal to require low-sulfur heating oil by May 2011. The proposed legislation, unlike the EQB regulation, would also require that home heating oil consist of 5 percent biodiesel.
While the push to require a biodiesel heating oil blend has been set back in Massachusetts, low-sulfur heating oil is on the way to becoming the new standard in several states. Low-sulfur heating oil bills have passed in New York and been signed into law in Maine and Connecticut.
Any changes in home heating oil raise concerns that the fuel will be more expensive, but ultra low-sulfur diesel is already being produced in great quantities and switching heating oil to the low-sulfur standard would not be a drastic change for the US refining sector, so retail heating oil prices in Pennsylvania and other states with low-sulfur mandates should be largely unaffected. The real impact on consumers’ wallets will be the lower maintenance costs that come with burning the cleaner low-sulfur fuel.
Vermont Raises Fee on Home Heating Oil Sales
A fee hike levied on heating oil dealers could raise costs for consumers as well. (Nicholas Whitaker for HeatingOil.com)
In a move that will increase costs to consumers of heating oil, kerosene, and dyed diesel, Vermont’s legislature voted to raise the licensing fee on these fuels by ½ cent per gallon, the NFIB (National Federation of Independent Business) reported on its website. The licensing fee had been set at ½ cent per gallon, so the increase doubles the fee. Fuel retailers, for whom a slight adjustment to the per-gallon cost can have large consequences, pay the fee, but consumers will also feel its impact, as at least a portion of the increased cost will be passed on to them.
Vermont’s legislature passed H.783, “An Act Relating to Miscellaneous Tax Provisions,” in May and the governor signed the bill on June 4. The new fee went into effect on July 1. The additional fee on heating fuels brings their licensing fee in line with the fee on motor fuels, which had already been established at 1 cent per gallon.
The revenue gained from the licensing fees goes to the Petroleum Cleanup Fund, a state fund that helps pay for the remediation of fuel spills, including leaks from home heating oil tanks. Tank leaks in Vermont have increased in recent years—there were 800 in 2009—as tanks have aged and become more susceptible to corrosion, adding more demand for resources from the Petroleum Cleanup Fund.
Until 2008 the fund had a surplus, but a sales tax holiday cut into the state’s revenue and the legislature made up for the losses by taking $2.8 million from the Petroleum Cleanup Fund. In 2009 licensing fees raised $750,000 but cleaning up heating oil spills cost $1.5 million, prompting the fee hike.
Vermont has tried to encourage homeowners to replace old heating oil tanks, which would reduce the number of heating oil leaks and spills, but budgetary constraints forced the state to suspend any financial incentives to do so.
An extra ½ cent per gallon may barely be perceptible to the average home heating oil user, though the need to replenish a fund that so recently ran a surplus may lead them to wonder about what their legislature is doing. Businesses with greater fuel demand may notice an added burden as the costs of the licensing fee make their way to their heating bills, and heating oil dealers—who are immediately responsible for paying the additional fee—will have to balance greater costs with the need to keep prices low in order to stay competitive and retain their customers.
Pre-Buy Heating Oil Programs Still Popular in Vermont
Despite the risks, many Vermont heating oil users choose pre-buy programs for their heating oil delivery. (image: wsj.com)
The Northeast is currently in the grip of a brutal heat wave, but heating oil users are already planning ahead on how to stay warm this winter. The Times Argus of Vermont spoke to a number of heating oil dealers in the state, who confirmed that pre-buy and price-lock programs remain popular among heating oil users in spite of their risks.
In a pre-buy program, consumers pay upfront for a season’s worth of heating oil, buying a set number of gallons at a set price. Consumers can also choose a price-lock contract that establishes a fixed price for their heating oil throughout the season and includes an option to pay on a budget plan that allows them to make steady monthly payments. Many consumers favor such programs because they believe that the price of heating oil will be lower in the summer, when demand for heating oil is low, than it will be in the winter, and pre-buying or signing a contract in the summer will assure them of a discount.
But heating oil prices are affected by a number of factors besides demand for home heating oil, as the winter of 2008-2009 dramatically showed. Many heating oil users in pre-buy programs and price-lock programs paid between $4.00 and $5.00 per gallon at the beginning of the season, only to watch prices nose-dive to $2.00 per gallon or less before the winter ended. Yet even with that experience fresh in their minds, heating oil users stuck with pre-buy programs the next year, to the surprise of heating oil dealers like Peter Trono of Trono Fuels: “I thought we’d see a drop of 20 to 25 percent [in pre-buy customers] and we didn’t experience that last year.”
Matt Cota, the head of the Vermont Fuel Dealers Association, says that pre-buy programs are generally a good deal for consumers and that the option of buying “downside insurance” makes it an even better deal. While the fixed price protects consumers from sharp price increases, downside insurance gives consumers some protection in case the market price of heating oil falls, as it did in the wake of the economic collapse in 2008. According to Cota, there are real risks but they can be managed:
I don’t think anyone can look into a crystal ball and say fuel prices will be more expensive, less expensive in the winter…. What we do know is that there are ways consumers can lock in a price that can buy insurance against volatility that’s the same mechanism that the dealers use.
Pre-buy programs present the risk of overpaying for heating oil if the market price falls, but there’s a far more serious risk that the Times Argus, and the dealers it speaks with, do not address: what happens if you pay thousands of dollars in advance and your heating oil dealer goes out of business? Consider the customers of Bernie’s Fuel Oil who jumped at a pre-buy rate of $1.99 a gallon last summer, only to be left with empty oil tanks as Bernie’s went bankrupt after being in business for 50 years. There are, unfortunately, a number of other examples that could be cited of pre-paid customers being left in the cold without oil.
Setting a fixed price can offer a sense of security against the notorious volatility of oil prices, but paying in advance, or deciding what per-gallon price to pay throughout the heating season, is still a gamble. What sounds like a good price in July may not be a good price come March. As Vermont’s heating oil dealers can attest, pre-buy programs remain a powerful attraction for some consumers, but it’s up to each heating oil user to determine the best option for his or her needs.
Find out more about your options for buying heating oil in the HeatingOil.com education section.
Mass. Suspends Mandate for Biodiesel-Blended Heating Oil and Diesel
The Massachusetts law requiring biodiesel be blended into heating oil and road diesel has been suspended for at least a year. (image: ecaptain.com)
On July 28 of last year, a law requiring sellers of home heating oil and road diesel to blend biodiesel into their products went on the books in Massachusetts, with a plan for the mandate to take effect on July 1, 2010. When that day arrived on Thursday, however, the Commonwealth’s Department of Energy Resources announced an indefinite suspension of the requirement, Boston.com reported on Friday. The department cited complications encountered while writing regulations for blending biofuels into petroleum products as the reason behind the suspension. Fearing that these complications could lead to high costs for businesses and higher prices for consumers, the Department of Energy Resources opted to suspend the requirement until blending parameters and programs are streamlined.
According to Philip Giudice, commissioner of the Department of Energy Resources, the suspension “was the best way to go, unfortunately.”
While heating oil dealers and consumers likely appreciate Massachusetts’s cautious approach aimed at keeping heating oil and diesel prices down, the suspension of the biofuel mandate is terrible news for the state’s biofuel producers. The decision dealt a heavy blow to an industry already weakened by a federal $1-per-gallon tax credit that was allowed to expire at the end of 2009. The tax credit has been added to and cut out of several bills this year, but has not been passed by both houses of Congress. The credit is currently under consideration in the Senate as part of the American Jobs and Closing Tax Loopholes Act (H.R. 4213). A June 30 motion to adjourn debate on the bill and put it to a vote did not pass, so it is hard to determine when, if ever, the bill will pass out of Congress and onto the president’s desk.
Until then, biofuel producers in Massachusetts who have counted on both the federal tax credit and the state blending mandate to support their businesses will be in dire economic straits. Heating oil dealer Jeff Bursaw of Bursaw Gas & Oil in Acton told Boston.com that he had to cut back on the amount of biodiesel he is adding to his product, as its rising price could push up retail prices beyond his comfort zone. “I have to back off,’’ Bursaw said. “Otherwise I’m going to blend the cost of my heating oil up another five, 10 cents a gallon.’’ Biofuel producer Curt Felix of Plankton Power, which makes biofuel from algae, is considering moving his business out of the state. “I really don’t know what to do next,’’ he said.
Despite these major setbacks, there is some optimism in the biofuel and heating oil industries that both the federal tax credit and state mandate will be reinstated soon. Said Michael Ferrante of the heating oil industry group the Massachusetts Oilheat Council, “We think the state is committed to it. July 2011 is a more realistic start date for it.’’
Massachusetts Postpones Required Heating Oil System Upgrade
Massachusetts heating oil users will have more time to upgrade their fuel delivery lines (number 4 above), which can be susceptible to oil leaks. (image: allaroundthehouse.com)
Massachusetts homeowners will be responsible for making sure their home heating systems are in compliance with new leak prevention guidelines, including paying for any upgrades to their heating system that may be necessary, but on Thursday the state legislature gave them an extra 14 months to do it, reports TheBostonChannel.com. The law was initially supposed to go into effect this coming Thursday, July 1, but now it has been postponed until September 2011.
The Oil Heating System Upgrade and Insurance Law required all heating tanks to have a protective sleeve on the fuel delivery line to safeguard the lines from corrosion that could lead to an oil leak. Such sleeves have been mandatory since 1990, so heating systems installed in the last twenty years should already be in compliance. Additionally, the law mandated insurance coverage for all heating systems compliant with the new regulations. The new insurance requirement will still go into effect on July 1.
Homeowners will have to pay for the upgrades themselves, which has irked some Massachusetts residents. Roslyn Scott spoke with TheBostonChannel.com after getting a quote for $99 to upgrade her heating system: “It’s not a major issue. It’s a safety issue, and I understand that but the time frame [for upgrading the system] and the $99—that’s what really angered me.”
The legislature’s decision to postpone the new requirement may console Scott, and will delay the expense to homeowners, but heating systems will eventually have to be upgraded. Some heating oil users may also find themselves paying significantly more than Scott; earlier estimates put the typical cost at $150–$300.
While the upfront cost may be burdensome, it pales in comparison to the cost of cleaning up a heating oil leak. The Massachusetts Department of Environmental Protection estimates that the average cost to clean up a heating oil leak is between $20,000 and $50,000. If a $300 investment can save $50,000, it will be money well spent.
Heating oil users won’t need to undertake the leak prevention upgrades until September of next year, but homeowners who want insurance to protect themselves in the case of an oil leak will need to have their systems inspected and authorized by their heating oil dealer. Homeowners may have to pay for a service call to have their system authorized, cautioned Mike Ferrante, president of the Massachusetts Oilheat Council, so they should check with their dealer first to see whether they will be charged for the inspection.
Every penny counts in this economy, but the consequences of an oil leak are serious and seriously expensive. The Massachusetts law offers heating oil users some protection against the catastrophic costs of cleaning up an oil leak. As with any upgrade or maintenance of equipment, installing a protective sleeve and insuring your heating system will cost some money now but may end up saving you money in the long run.
New York State Assembly Follows Senate and Approves Low-Sulfur Heating Oil Bill
New York’s legislature has passed a bill to clean up the state’s air, but critics say it unfairly exempts New York City’s heaviest polluting buildings. (image: nydailynews.com)
Legislation that would lower the sulfur content of home heating oil in New York state passed the State Assembly on Wednesday by a vote of 87 to 24, the New York Times reported. The bill passed the State Senate last week and needs only the signature of Governor David Paterson to become law.
Lowering the sulfur content of no. 2 heating oil, the grade of heating oil most commonly used to heat residential buildings, to the same 15 parts per million limit that already applies to on-road diesel would reduce pollution that is harmful to the environment and poses a threat to public health. However, opponents of the legislation say the new requirement would do more harm than good by causing fuel shortages and skyrocketing prices for heating oil consumers.
John Maniscalco, head of the New York Oil Heating Association, a heating oil industry group, assured consumers that the industry is prepared to move to the new fuel standard:
We are highly confident that ultra low sulfur heating oil will remain affordable and widely available while providing our valued customers with a superior, cleaner and more environmentally friendly fuel.
Regional divisions in New York politics have also figured into the debate, with many upstate legislators arguing that the bill would put an unfair burden on upstate residents while exempting New York City from shouldering the costs of the bill. Many large buildings in New York City burn no. 4 and no. 6 heating oil, fuels that are significantly dirtier and have much higher sulfur content than no. 2 heating oil, but the statewide bill applies only to no. 2 heating oil. The bill’s defenders have said that the legislature did not want to preempt what were likely to be more stringent regulations coming from New York City; Mayor Michael Bloomberg’s administration continues to work with the City Council to eliminate the use of no. 4 and no. 6 heating oil.
Governor Paterson has already advocated for a switch to low-sulfur heating oil in his energy plan, and is expected to sign the bill into law.
Accusations Fly Over New York State’s Low-Sulfur Heating Oil Bill
OK, New York’s State Senate hasn’t gotten as bad as Ukraine’s parliament—where the above scuffle took place—but emotions are high in the debate over low-sulfur heating oil. (image: upi.com)
New York’s State Senate passed a bill last Thursday that would lower the sulfur content of home heating oil, but the fighting over the legislation appears to be far from over. Opponents of the bill are looking ahead to the next election and attacking senators who supported the low-sulfur mandate, while the bill’s supporters accuse their opponents of being in the pocket of big oil.
Voters in Sen. Darrel Aubertine’s upstate district have received automated phone calls that tell them the bill—which Aubertine voted for—will raise their heating costs by $900 this winter, reports the Watertown Daily Times. He’s not the only senator facing opposition. Senator Suzi Oppenheimer of New York’s 37th District was criticized sharply by Senate candidate Bob Cohen, who called Oppenheimer’s vote “inexcusable” and claimed it could raise the cost of heating oil by as much as 90 cents per gallon, according to a press release found at NewRochelleTalk.com.
The figures used to attack the legislation come from a study by Hart Energy Consulting, says the Watertown Daily Times. The consulting firm predicted cost increases of 20 to 30 cents per gallon of heating oil, and said those increases could run as high as 60 to 90 cents per gallon.
Meanwhile, Senate Democrats worked to associate their Republican counterparts with the national villain of the moment, BP, pointing out that a lobbying group that opposed the low-sulfur bill had been hired by BP and Sunoco, Politico reports.
In a more substantive response to the furor over the low-sulfur heating oil bill, a spokesman for Sen. Aubertine, Andrew Mangione, refuted the assertions in the automated phone calls to the Daily Times and to The Valley News of Oswego County. Mangione rejected the idea that the low-sulfur requirements would raise heating costs:
This won’t do anything to your bill….The bill calls for the reduction of sulfur to make the fuel more efficient and it will save money.
Mangione went on to call the cited increase of $900 “a completely false number that seems to be made up.”
To support his counterclaim that lower sulfur content will actually save consumers money, Mangione pointed to the conclusions of the New York Oil Heating Association (NYOHA). In March the NYOHA president, John Maniscalco, co-authored an op-ed that said reducing the sulfur content of fuel would save $40 million in collective maintenance costs, and the increased efficiency of the cleaner fuel would save heating oil users an average of 4 percent on their heating bills.
Wherever low-sulfur fuel standards have been proposed, they have received the support of the heating oil industry. The New York bill would lower the sulfur content of home heating oil to 15 parts per million, the same standard already in place for on-road diesel. By bringing heating oil in line with the specifications of the much more plentiful and widely used low-sulfur diesel fuel, the supply and distribution networks for home heating oil will be much simplified and heating oil users will have access to a much larger supply of fuel, say proponents of low-sulfur heating oil like the energy company Mirabito in New York state and the Independent Connecticut Petroleum Association (ICPA).
Exactly what impact the bill—which hasn’t yet been signed into law—will have on heating oil prices can’t be determined with absolutely certainty. The debate seems to have pitted New York’s heating oil users against New York’s heating oil dealers, but in reality both groups would like to see lower prices. The average heating oil dealer is not like Exxon, and doesn’t profit from higher oil prices—higher prices simply mean they have to pay a higher wholesale price for heating oil, and then try to sell it at a higher retail price that makes it less desirable to consumers.
New York State Senate Passes Low-Sulfur Heating Oil Bill
After a divisive debate, the New York State Senate voted to lower the sulfur content of home heating oil. (image: nydailynews.com)
New York’s State Senate put New York on the path to join its Northeastern neighbors Maine and Connecticut in mandating low-sulfur heating oil. While the bill passed the New York Assembly by a landslide of 146-1, the State Senate vote proved more contentious and the bill’s passage provoked outrage from several Senators.
The bill, S1145C, would limit the sulfur content of heating oil to 15 parts per million, the same low-sulfur standard that already applies to on-road diesel fuel, and includes a provision for the governor to suspend the requirement if there isn’t sufficient fuel available. The Senate cited the same benefits of low-sulfur heating oil that had previously been cited by the New York Oil Heating Association and the New York chapter of the American Lung Association: lower soot pollution that causes respiratory problems, fewer greenhouse gas emissions, and improved system performance and system efficiency that comes form burning a cleaner fuel. However, the bill’s opponents claim that it will lead to soaring heating oil prices, and even shortages of heating oil, for upstate residents.
Upstate Senators accused their colleagues of not recognizing the needs of upstate residents. NewsChannel34.com of Binghamton, NY quoted Senator Tom Libous:
This legislation passed by Senate Democrats will hurt families and businesses throughout Upstate New York. I am shocked that my Democrat colleagues who represent Upstate communities would support this bill, which benefits New York City and devastates families throughout the rest of the state.
Senator Catherine Young expressed a similar opinion on the Senate floor, reports WBEN of Buffalo:
“It sounds very disingenuous to me, when you say that the people in our regions are winners. That this doesn’t hurt the people in our regions, that it protects them. That’s not true,” Young told her downstate colleagues on the Senate floor. “People are hurting in upstate New York.”
Wherever low-sulfur heating oil legislation has been proposed, it has faced objections that it would create a more costly fuel and lead to fuel shortages. Yet low-sulfur proposals have also enjoyed the support of the state heating oil industry in each case, and the heating oil industry has argued that the move to low-sulfur heating oil will actually expand the available supply of heating oil (because it will have similar specifications to other distillate fuels) and save consumers money through improved efficiency and lower maintenance costs.
The bill remains to be signed by Governor Paterson, but it seems to be only a matter of time before upstate New York (and the rest of the Northeast) moves to low-sulfur heating oil. Already law in Maine and Connecticut, low-sulfur mandates have been proposed in New Jersey and Pennsylvania as well, and the shift to low-sulfur fuels has received added momentum from changes within the refining industry.
Clean heating oil is on the march in the Northeast. The more states that make the switch, the smoother the transition to production and distribution networks of the low-sulfur fuel will be.
Heating Assistance Fraud Gets NJ Heating Oil Dealer 4 Years in Prison
For stealing from the state’s heating assistance program, a New Jersey heating oil dealer faces four years behind bars, and could be joined by others who have defrauded the state. (image: scrapetv.com)
Over the course of five or six heating seasons, Thomas J. Harris, the owner and sole proprietor of Harris Fuel Oil, defrauded New Jersey’s Home Energy Assistance (HEA) Program of nearly $400,000. After pleading guilty in 2009 to money laundering and misapplication of government property, Harris was sentenced to four years in prison on Thursday, according to a press release from the New Jersey attorney general’s office.
Harris Fuel Oil participated in the state’s Low-Income Home Energy Assistance Program (LIHEAP), which is one part of New Jersey’s HEA Program, and Harris’s scheme involved offering cash, rather than heating fuel, in exchange for heating assistance checks, provided that the cash amount was less than the value of the heating oil. The press release quotes Attorney General Paula T. Dow on the case:
“This heating oil supplier shamelessly exploited the low-income beneficiaries of the New Jersey Home Energy Assistance Program, enticing them to trade the assistance checks that were supposed to heat their homes for a reduced amount of cash, while he pocketed the difference,” said Attorney General Dow. “In doing so, he stole from the state and its taxpayers.”
Investigators found 259 cases from 2008 and 2009 in which Harris fraudulently gave cash for heating assistance checks. In those transactions Harris deposited $399,812 in HEA funds and distributed $247,700 in cash, leaving the remaining $152,112 for himself. In addition to prison time, Harris must pay restitution for the money that he took for himself.
Harris is involved in two related cases in which HEA administrators are implicated in defrauding the state. Constance Campbell has pleaded guilty to processing false applications for herself and her family, some of which were cashed with Harris, and still awaits sentencing; the state has asked for a five-year prison term. Nicole Victor has been indicted on similar charges, and was also accused of working with Harris to trade fraudulent assistance checks for cash.
While these investigations have uncovered a dismaying amount of corruption in New Jersey’s heating assistance program, the successful prosecution and sentencing point to a serious effort on the part of the state to ensure that energy assistance funds make it into the hands of those who need them. Stephen Taylor, director of New Jersey’s Division of Criminal Justice, promised continued vigilance in regulating heating assistance in the state:
We will continue to aggressively investigate and prosecute those who engage in this type of fraud, which drives up the cost of public assistance programs.
NJ Bill to Open Clean Energy Fund to Heating Oil Users
New Jersey’s state senate could give heating oil users the same incentives that are already available to residents who heat with natural gas or electricity. (image: nj.com)
New Jersey’s state senate is considering a bill that would expand energy-efficiency incentives financed by the state’s clean energy fund to heating oil users who want to upgrade their heating systems, reports NJSpotlight.com. The bill would ensure that any incentives available to natural gas users who buy heating equipment would be available to heating oil consumers who purchase similarly efficient oilheating equipment.
Heating oil users are currently blocked from benefiting from the money raised by the societal benefits charge, a surcharge on utility bills. The bill’s sponsors say that their legislation would help the state fulfill its energy master plan, which calls for a 20 percent reduction in energy use by 2020, by essentially leveling the playing field among different heating fuel consumers. Upgrading to a high-efficiency heating oil boiler or furnace lets consumers burn less oil, saving them money and cutting down on carbon emissions.
But the bill’s opponents say that the clean energy fund was not intended to finance upgrades of heating oil equipment. New Jersey’s Division of Rate Counsel, a state agency that represents utility consumers, said that only consumers who heat with natural gas and electricity should benefit from the clean energy fund since money is raised for the fund through a surcharge on natural gas and electric bills. The proposed bill would not expand the surcharge to heating oil purchases.
The New Jersey Utilities Association, an industry trade group that also opposes the bill, worries that expanding access to the fund will spread its resources too thin, and force the state’s Board of Public Utilities to make deeper cuts to its cash-strapped efficiency programs. Money set aside for clean energy has already been raided to fill gaps in New Jersey’s state budget. In March, Governor Chris Christie shifted $65 million from a Global Warming Solutions Fund to the state’s General Fund, and a total of more than $400 million marked for clean energy has been re-routed to patch up budgetary holes.
Supporters of the bill, such as New Jersey’s Sierra Club, are unconvinced by such arguments and think that if New Jersey wants to cut energy use it would be illogical and unfair to exclude heating oil users from energy-efficiency incentives. New Jersey state senator Robert Smith, one of the bill’s co-sponsors, told NJ Spotlight that the current incentive structure amounted to discrimination:
“These people [heating oil users] should not be discriminated against,” he said. “The bottom line is our energy master plan calls for us to reduce our carbon footprint and this will help us to achieve that goal”
Smith also pointed out that heating oil users are already paying into the efficiency fund, and will continue to do so whether or not they are granted access to it. “Show me a home heating customer who doesn’t use electricity,” he said. “There’s nothing in this bill that increases rates.”
The state senate expects to discuss the bill before their July recess. If it passes, New Jersey’s heating oil users will gain the same access to energy-efficiency funds that their neighbors who use other heating fuels already have, making it easier for them to upgrade to a high-efficiency boiler or furnace that will reduce their energy use and help them lower their heating bills for years to come.
CT Governor Signs Low Sulfur and Biodiesel Heating Oil Mandates into Law
Connecticut Governor Jodi Rell (shown here signing a different bill) signed legislation lowering the sulfur content and increasing the biodiesel content of heating oil on May 26. (image: housegop.ct.gov)
Connecticut Governor Jodi Rell recently signed a bill that will put her state at the forefront of the heating oil’s transition into a cleaner and greener fuel. The bill, SB 382, requires all heating oil sold in the state to contain less than 0.3 percent sulfur and at least 2 percent biodiesel by July 1, 2011. The state senate unanimously approved SB 382 on May 3 and the state house did likewise by a vote of 146-1 on May 5. Although the governor’s signature officially made the mandates the law of the state, a provision in the bill holds off final implementation of the requirements until Massachusetts, New York and Rhode Island pass similar legislation. Massachusetts already has a 2 percent biodiesel requirement on the books, and mandate proposals are in the works in the New York and Rhode Island state legislatures.
The Independent Connecticut Petroleum Association (ICPA), a heating oil industry group that helped craft the original legislation, announced the bill’s signing (which actually occurred on May 26) on Monday. An ICPA press release hailed the four main benefits to Connecticut that will result from the law:
Eliminating sulfur and instituting a renewable fuel content in heating oil will come at a cost savings to consumers. It will reduce greenhouse gas emissions by more than 40%. It will work with Connecticut’s burgeoning biofuels industry and add jobs to our state. It will work with existing heating systems, without modification, and improve their efficiency.
