Page 36 - Oil & Energy - March 2013

Energy Policy
Fuel Dealers Challenge Energy Proposals
By Ed Burke, Dennis K. Burke Inc.
RECENTLY ANNOUNCED PROPOSALS TO
revamp state energy policies are not sitting
well with everyone. A few of the Northeast
states are pushing plans that would spend
lots of tax dollars for natural gas companies
to expand pipelines.
Understandably, local heating oil and
propane dealers feel they’re being treated
unfairly. At issue, government’s role here is
not to pick winners and losers.
MAINE PICKS FAVORITES
Maine Gov. Paul LePage has announced
his plans to fast-track natural gas throughout
the state. Referencing Maine’s high energy
prices, specifically electric, he noted that
“Maine has picked favorites” before.
About 25 years ago, Maine began
requiring electric utilities to buy non-oil
generated electric at higher prices.
Lawmakers predicted that oil prices would
quickly reach $200 a barrel and never come
down. As it turned out, heating oil was the
better value for most of those years, and
unfortunately, consumers ended up with
higher electricity rates.
Today, natural gas has the price
advantage. Their price has increased over
70 percent in the past year but is still low
compared to heating oil.
OIL AND PROPANE’S POSITION
Average homes using heating oil have
reduced consumption by 40 percent in
recent decades. Our industry is moving
to a cleaner, low-sulfur fuel needed for
the introduction of new ultra-efficient
technologies. Many oil dealers have also
embraced Bioheat ®, reducing overall
emissions to rival those of natural gas.
If we’re just talking about price,
propane tracks closely with natural gas
and is competitively priced. If it weren’t for
the local propane marketer’s infrastructure
(truck, tanks, and rail facilities), propane
could be as “cheap” as natural gas.
So, why should the people of Maine be
subsidizing pipelines to extend where the
owners of the natural gas utilities won’t go?
It’s a poor return on investment for the
natural gas companies to open markets in
rural areas with their own profits. Maine’s
8,000-plus employees in the oil and propane
business have reliably delivered high value
products and services throughout “all of
Maine” without government subsidies.
These small businesses have provided
decades of employment and support in
their communities.
Additionally, LNG is already available
for anchor loads in Maine. The paper mills
can truck in LNG at a fraction of the cost
of building new pipelines. It is slightly
more expensive, but it’s market driven and
doesn’t require government support.
As for subsidizing natural gas pipelines,
take me back to the good old days, when
“fast-track” meant that the government
was going to cut some of the red tape for a
project, not pay for it.
CONNECTICUT’S ENERGY VISION
Connecticut Gov. Dannel P. Malloy
has announced a proposal that would
convert hundreds of thousands of heating
oil and propane customers to natural gas.
The proposal has an estimated cost of $6.8
billion, and no one has any idea how it will
be paid for.
Representing more than 13,000 workers
inConnecticut’sheatingoilindustry,business
owners met with legislators to discuss the
proposal’s impacts. Talking with local fuel
dealers, the speaker of the housemade it clear
that he does not “support picking winners
and losers’ and doubted that the legislature
would approve an energy plan that “uses
taxpayer dollars” to expand natural gas lines
throughout Connecticut. The speaker also
spoke about how oil dealers need to embrace
change, diversify, and position themselves
to become energy advisers. An energy bill is
expected sometime this month.
VERMONT’S HEAT TAX
A proposal that would impose a Heat
Tax to convince Vermonters to use less
heating fuel has received a cold reception.
In a report released to state lawmakers, the
Thermal Efficiency Task Force finalized
their recommendations.
Currently, Vermonters pay a one-half
cent tax on heating fuel to help fund the
state’s weatherization program. The task
force is asking for more than $276 million
to weatherize 80,000 Vermont homes over
the next seven years.
The report suggests that homeowners
either pay a Carbon Tax (10-cent per gallon
on heating oil, 5-cents on propane); a BTU
tax (12-cent per gallon on heating oil, 8-cents
on propane); or a heating oil sales tax, which
adds more than 20-cents per gallon.
Thankfully, the Heat Tax has been
shelved for now. Like most lawmakers, the
governor said he embraces the goals of the
Thermal Efficiency Program, but not the tax.
Thermal Efficiency Program legislation
is expected to take shape this month.
Honestly, does anyone believe that a hefty
tax on heating fuel will drive down usage?
These are just a few of the state proposals
challenging our industry. Federal mandates
and regulations continue to diminish our
position in the marketplace, while countless
taxpayer dollars are spent on technologies
like wind and solar with little or no results.
Almost everyone agrees that we need
energy policies with an “all of the above”
approach. More to the point, we need
policies that are fair, don’t limit customer
choice, and don’t pick one energy source
over another.
36 • OIL&ENERGY