Page 8 - Oil and Energy-February 2013
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8 • OIL
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ENERGY
• The report also fails to adequately contemplate needed
improvements to infrastructure that could facilitate the
transportation of lower-cost mid-western U.S. crude oil and
domestically refined products to the region.
The heating oil industry has been responsive to their customers on
fuel price and conservation, and the desire to reduce environmental
impacts. Heating oil dealers offer their customers full service and
maintenance programs, and a variety of pricing mechanisms to best fit
their household budgets and allow them to control their costs, such
as pre-pay, budget and price-fix programs.
Through its own research and development, the oilheat industry has
improved the efficiency of its heating appliances and has actually
reduced household consumption from 1,200 gallons to 700 gallons per
year on average over the past decade …what other industry helps
consumer use and spend less of its product? The industry continues to
advocate for policies that will lower the sulfur content and provide for
the displacement of traditional heating oil with renewable biofuels,
both of which have and will continue to reduce emissions, reduce a
customer’s service costs and provide for the introduction of even
cleaner burning and more efficient home heating appliances in the
coming years. Studies have shown that ultra-low sulfur and biofuel-
blended heating oil burns cleaner than natural gas. This is notable and
we would like the NEC to be supportive of our efforts.
Energy policies that pick winners and losers challenge the
conventional wisdom that when all energy sources are considered –
natural gas, oil, electricity, solar, coal, and biofuels – the United States
and North America are on the verge of complete energy
independence and potentially lower pricing across the spectrum;
something we did not think possible just five years ago.
NEFI, along with the six state associations, ask NEC to consider the
impact on all businesses as it develops policy positions to help
strengthen the New England region. As an industry, we stand ready to
assist you in working for a stronger economy and energy future for
New England.
EPA Issues Rule Allowing 500ppm
Diesel In Locomotive & Marine Engines
The U.S. Environmental Protection Agency (EPA) will allow the
petroleum industry to produce diesel fuel containing up to 500ppm
sulfur for use in older locomotive and marine engines beyond the
2014 date when the sulfur content of LM fuel was scheduled to be
reduced to 15 ppm. This means 500-ppm LM fuel will be allowed in
the Northeast Mid Atlantic (NEMA) area indefinitely.
The EPA said the rule was necessary to provide a pool for 500-ppm
diesel fuel derived from pipeline transmix. Transmix is a blend of
petroleum products that mix together during pipeline transportation.
Transmix can be distilled into diesel fuel, but only to a 500-ppm sulfur
content or greater. The EPA had required in a 2006 rulemaking that LM
fuel be transitioned to 15 PPM by the end of 2014. However, it was not
until after the ULSD rule was adopted that EPA learned older
locomotive and marine engines could not run on 15ppm diesel fuel.
The agency said it agreed with refiners and the railroad and marine
industries that “access to the 500 ppm LM is critical due to the limited
alternative markets for transmix distillate product and the need for
such a market to maintain the flow of products through pipelines.”
The EPA initially planned for transmix to go into the heating oil pool in
the NEMA area since all other distillates in the region would be
transitioned to a 15-ppm sulfur standard by 2012. The EPA however did
not count on states in the NEMA area adopting a 15-ppm heating oil
standard, which essentially shuts transmix out of the heating oil pool.
The 500-ppm fuel must be used in older locomotive and marine engines
that do not require 15-ppm sulfur diesel fuel, according to the rule.
Transmix may also enter the heating oil pool until a transition to
15-ppm is made across the region. EPA said the 500-ppm LM diesel
fuel will phase out as the older locomotive and marine fleets turn over
and replaced with new equipment that is ULSD compatible.
Federal Biodiesel Blender’s Credit Reinstated
In the recent Fiscal Cliff legislation, Congress reinstated the $1.00
per gallon federal biodiesel blender’s credit that had expired on
December 31, 2011. Congress extended the biodiesel blender’s credit
through December 31, 2013 and made it retroactive to January 1,
2012. This is good news for those who blend biodiesel into heating oil
and motor fuels.
The retroactive credit provision means that any biodiesel blends
created during calendar year 2012 are now eligible for the $1.00 per
gallon credit. Blenders must still have an IRS 637M registration and
valid biodiesel certificate from the producer to file a retroactive claim
for 2012. Credits must first be taken against current federal motor fuel
excise tax liability on IRS Form 720. Any surplus may be claimed as a
refund on IRS Form 8849.
The IRS is currently drafting procedures for retroactive claims. It is
expected that the new procedure will be the same as the old filing
requirements but with a notation at the top of the forms that the
claim pertains to 2012. NEFI is working closely with the IRS on this
issue and will publish a compliance bulletin when the retroactive
claim procedure is issued (within 45 days according to the IRS).
For further information or questions contact Mark S. Morgan,
NEFI Regulatory Counsel at
Coast Guard Issues New Policy for
Lost or Expired Driver TWIC Credentials
The U.S. Coast Guard has issued a new policy relating to unescorted
access by Transportation Worker Identification Credential (TWIC)
holders who have reported their card lost, damaged or stolen. Under
Policy Letter 12-04 (FAC 12-04), facility owners and operators may
grant unescorted access to these individuals for up to 37 days, if they
demonstrate that a replacement card has been ordered and provide
the Facility Security Officer (FSO) with their name as it is recorded with
the TWIC office. The new policy also allows unescorted access for
workers who apply for a renewal TWIC prior to the expiration of their
existing card but who are unable to take possession of the
replacement before it expires “due to a significant delay in the
application, production, issuance and/or activation process.”
