Year in Review
Sean Cota is the president of Vermont-based Cota & Cota, Inc., a third generation family business marketing heating oil and motor fuels in southwest New Hampshire and southeast Vermont since 1941 and the 2011 chairman of the Petroleum Marketers Association of America (PMAA) Executive Committee. Cota has served as the president of the New England Fuel Institute; vice chairman of the National Association For Oilheat Research and Education; chairman and treasurer of the National Oilheat Research Alliance and as a member of the Energy and Environment Markets Advisory Committee for the Commodity Futures Trading Commission.
FON: How was business in 2010?
Cota: Our business was pretty good in 2010, much better than a typical baseline year. We’ve had customer growth in all aspects of the business. In our sector of the business we provide heating fuels, plumbing and heating, HVAC, motor fuels, bio blended products and we do wood pellets’so there’s a variety. In general terms, the bulk of our sales probably relate to heating fuels and followed by HVAC and plumbing and heating sales. The plumbing and heating sales have been expanding fairly significantly in the past year and a lot of that has been by design.
We knew the recession was coming and we knew that there was going to be some tax credit impacts for people doing upgrades to their heating systems. Many people want to conserve energy and that’s a big part of what we do, so that’s generated a number of sales. We’ve had almost a doubling of that year to year and the number of customers for heating fuels has increased fairly significantly in the past year, but per gallon consumption by consumers is down almost an equal amount. So even though we have more customers, we’re almost selling the same gallon amount. But that is the trend of the industry.
FON: What are the main challenges you see facing the industry as we move into 2011?
Cota: There is no lack of challenges for our industry. One of the most significant challenges is the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act including the derivative reform with the CFTC and SEC and the debit card interchange issues with the treasury. People in general know that we passed financial reform, but they don’t necessarily see an impact for that or make a connection. Well, the impact has not yet happened. Dodd-Frank was passed on July 15 and most of it will not be implemented until July 15, 2011. You can write a very good law, but it is the administrative rules where the rubber meets the road. You can have, for example, a law that says all dinner plates will be white. But in the administrative rule process, you can have it be implemented in such a way that white is defined as pink for three months and gray for eight months, and it’s our role as an industry to say, ‘Let’s have a radical approach to this white, we consider white be white.” And of course, the banks and the financial institutions do not want that.
FON: Just how much impact do you feel the financial markets are having on oil prices, beyond what would typically be considered normal supply and demand issues?
Cota: We recently did some calculations with some folks in the investment community taking the baseline values of what energy costs used to be from the mid-80s to 2004 then adding in currency and supply and demand numbers, etc. And if you compare that to where we are at today, the differential is about a $1 to $1.35 per gallon. That’s huge. A lot of that is the result of the unregulated nature of the market where we won’t really come to terms with that until July of 2011.
We will probably not have another chance to rewrite these rules for 30 years.