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ENERGY
Ramps Up Over Crude Oil Export Ban
As NEFI members are well aware, revolutionary technologies such as
horizontal drilling and hydraulic fracturing (or “fracking”) have caused a
surge in domestic crude oil production in recent years. Crude oil imports
are at historic lows, and the U.S. is expected to become the world’s largest
oil producer by 2015, thanks in large part to “tight” oil production in the
Bakken in North Dakota, Eagle Ford in Texas, and other shale oil formations.
As a result, oil producers and their allies in Congress are ramping up calls
for new legislation to repeal a 40-year-old law enacted in the wake of the
1973 Oil Embargo that prohibits the export of most U.S. crude (but not
refined petroleum products).
Proponents of the repeal – such as Sen. Lisa Murkowski, Ranking
Republican on the Senate Energy and Natural Resources Committee, who
has recently been very vocal on the issue – argue that unlike in the 1970s
the U.S. is now producing more oil than it needs. Furthermore, many U.S.
refineries were designed to handle heavier crude oil, not the light sweet
crude being produced from shale formations. The “new American Oil
Boom” has outpaced development of pipeline infrastructure, which has
challenged the ability of producers to transport to refineries designed for
this type of crude oil and forced them to rely on costly, unsafe and
inefficient transportation methods such as truck and rail. The resulting
high inventories and supply bottlenecks produce lower prices in the
Midwest and higher prices in areas more dependent on the global market,
including but not limited to the East Coast.
Opponents, led in the Senate by Ed Markey (D-MA), argue that lower
cost U.S. crude should be used here in America and that a repeal of the
1975 ban would expose the market to global demand pressures and
increase prices for consumers. Many refiners oppose the repeal because of
the “crack spread,” i.e. the profit they can make from refining lower cost U.S.
crude and selling products such as gasoline and diesel fuel into the
high-priced global market. NEFI has not yet taken an official position on
the issue, but its Government Affairs Committee will discuss it when it
meets later this month.
New England Senators Want Greater Access to Natural Gas
All 12 U.S. Senators from New England have written U.S. Energy
Secretary Ernest Moniz to express “concern about the natural gas and
energy market challenges” facing the region. They have urged the
Secretary to include access to natural gas in New England as part of the
first interagency Quadrennial Energy Review (QER). The proposed QER was
announced by President Obama in June and will be modeled after similar
defense- and technology-related initiatives.
The goal of the QER is to get various federal agencies on the “same
page” on national energy issues – especially natural gas infrastructure –
in order to build unified and cohesive national energy policies. In their
letter the Senators argue that the increased reliance on natural gas for
electricity production and home heating has outpaced natural gas
pipeline capacity. As a result, the region’s natural gas prices have trended
75 percent higher than the Henry Hub natural gas spot price. In January of
2014 a cold snap sent the regional’s natural gas prices to $35/MMBtu,
more than 10 times the national average.
Senator Jack Reed (D-RI) is leading the effort and rallied the region’s
Senators to the letter. NEFI staff will meet with Reed and other members
of the delegation in the coming weeks to discuss industry concerns that a
“holistic” approach be taken to energy in New England. Responding to
a similar statement by the six New England Governors in late December,
NEFI urged that consideration be given to the importance of the home
heating oil industry to the region’s economy and advancements it has
made into cleaner burning and renewable heating fuels. We also urged
an approach that includes access to lower cost shale oil and refined
petroleum products coming out of the Bakken and Eagle Ford formations.
We will keep you updated on the latest developments.
EPA Proposes Tough New Air Standards
For New Wood Stoves And Heaters
The U.S. Environmental Protection Agency (EPA) is proposing standards
for the amount of air pollution that can be emitted by new woodstoves and
heaters. The agency’s proposal would make the next generation of stoves
and heaters an estimated 80 percent cleaner than those manufactured
today, leading to important air quality and public health improvements in
communities across the country. The proposal would affect a variety of
wood heaters manufactured in 2015 or later and will not affect heaters and
stoves already in use in homes or currently for sale today.
Smoke from residential wood heaters, which are used around the clock
in some communities during the winter heating season, can increase toxic
air pollution, bringing the presence of volatile organic compounds, carbon
monoxide and soot (particulate) to levels that pose serious health
concerns. Particulate pollution is linked to a wide range of serious health
effects, including heart attacks, strokes and asthma attacks. In some areas,
residential wood smoke makes up a significant portion of the fine particle
pollution problem. EPA’s proposal would work in concert with state and
local programs to improve air quality in these communities.
The agency’s proposal covers several types of new wood-fired heaters,
including: woodstoves, fireplace inserts, indoor and outdoor wood boilers
(also called hydronic heaters), forced air furnaces and masonry heaters.
Many residential wood heaters already meet the first set of proposed
standards, which would be phased in over five years to allow
manufacturers time to adapt emission control technologies to their
particular model lines. Today’s proposal does not cover fireplaces, fire pits,
pizza ovens, barbecues and chimineas.
When these standards are fully implemented, EPA estimates that for
every dollar spent to comply, the American public will see between $118
and $267 in health benefits. Consumers will also see a monetary benefit
from efficiency improvements in the new woodstoves, which use less
wood to heat homes. The total health and economic benefits of the
proposed standards are estimated to be at $1.8 to $2.4 billion annually.
EPA will take comments on the proposal for 90 days after it is published
in the Federal Register. The agency will hold a public hearing Feb. 26, 2014
in Boston. EPA expects to issue a final rule in 2015. For more information,
visit
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CONTACTS:
Michael Trunzo, President & CEO:
Jim Collura, NEFI Vice President for Government Affairs:
Mark S. Morgan, Esq., New England Fuel Institute Regulatory Counsel:
