24 • OIL
&
ENERGY
Q&A: Thomas Tubman
AEC Counters Natural Gas Aggression
NATURAL GAS UTILITIES ARE TAKING THEIR
pursuit of heating oil customers to a new
level by working with state governments
on ambitious expansion projects. As
state Oilheat associations come to
the defense of member companies,
many are drawing on the resources
of the American Energy Coalition
(AEC), whose mission is to support
Oilheat in the competitive struggle.
Oil & Energy
recently spoke with AEC
Executive Director Thomas Tubman about
the struggle for market share.
There is a new kind of aggression on
fuel conversion occurring in New York,
Connecticut and Pennsylvania, with the state
governments aligning with gas utilities.
Please explain what is happening.
The effort is a little different in each
state. In Connecticut, for example, the ini-
tiative was originally proposed and driven
by the Governor Dannel Malloy, but his
proposals were largely defeated in the state
Legislature due in large part to the fine
work of the Connecticut Energy Marketers
Association (CEMA). Now the initiative has
apparently shifted to the regulators, where
the Public Utilities Regulatory Authority
(PURA) is leading the effort. So the threat,
while derailed and slowed a bit earlier this
year, is still alive in Connecticut and still
a threat.
In New York, the push is coming from
the regulators, or at least that is the appear-
ance, with the Public Service Commission
(PSC) leading the effort. The stated goal in
New York State is to target some 500,000
homes that are within 100 feet of a gas
main but do not heat with gas; and possibly
another 600,000 that are more than 100 feet
from a gas line but within a utility
franchise area. So a total of 1.1 mil-
lion oil-heated homes in the state
are at risk.
In Pennsylvania, the process is
not as far along as inConnecticut and
New York and appears to be coming
from the Legislature. With Pennsylvania
sitting atop the Marcellus Shale play, it is
understandable that the state’s politicians
would like to see more residents with
access to that local resource. Even the state
of Maine is promoting the expansion of
natural gas pipelines to help the utilities
bring their product to new customers.
All these initiatives have one thing in
common: a sincere effort by state govern-
ment to significantly expand natural gas
pipelines and bring gas service to homes and
businesses that do not have access to natural
gas today; and to find a way to pay for that
infrastructure build-out with the needed
money coming from a source “other than”
utility shareholders. In other words, the utili-
ties don’t want to pay for the expansions.
State Oilheat associations are, of course,
diligently opposing these proposed expan-
sions, as are other industry and environ-
mental groups.
How serious is the threat to heating oil
accounts from initiatives like those?
It is a very serious threat with poten-
tially devastating consequences. If just
Connecticut and New York were to be suc-
cessful in reaching their goals of converting
300,000 oil-heated homes in Connecticut
and 1.1 million in New York, that would
be 1.4 million oil-heated homes lost. That
would put hundreds of dealers out of busi-
ness, thousands of people out of work and
significantly impact the industry from the
fuel oil refiner to Oilheat equipment manu-
facturers to the supply houses that provide
replacement parts for oil burners and oil
delivery systems.
What is the outlook for the prices
of heating oil and natural gas?
A second LNG export facility has
recently been approved by federal regula-
tors, and this is good news. As the export
of natural gas begins in the next two to
three years, more upward pressure will
be placed on gas prices. At the same time,
Dow Chemical and DuPont have both
announced plans to build chemical plants
near large shale plays to take advantage of
the abundant and cheap natural gas prices.
The use of natural gas as a transportation
fuel has already begun too and is an attrac-
tive alternative to gasoline and diesel for
auto and truck fleets that return to a fixed
base at the end of daily drivers’ shifts.
The switch from coal to gas for electric
generation is well under way, and by some
measures, has already put a strain on
interstate pipelines to supply the product
in sufficient quantities to satisfy both space
heating needs in the coldest winter weather
and at the same time fuel electric generation
that tends to also see demand rise during
cold snaps.
