The State of Oilheat Marketing
The Connecticut Oilheat Alliance was established last year by the Connecticut Energy Marketers Association (CEMA). The voluntary program in the Nutmeg state is designed to make up for the failure of Congress to re-authorize the National Oilheat Research Alliance (NORA), which was funded by a mandatory check-off program (see sidebar for details).
Leaders of at least two other state associations view the move positively.
‘It’s a good idea,” said Matt Cota, executive director of the Vermont Fuel Dealers Association (VFDA). ‘We haven’t undertaken [such] an initiative, but we certainly recognize that the loss of NORA has had an impact on the oil heat industry in Vermont as well.”
Michael Ferrante, president of the Massachusetts Oilheat Council (MOC), said, ‘I feel very confident that the association will submit a request to our attorney general for her opinion on creating such a state-level fund that would mirror a NORA model. That is something that our board of directors is going to pursue.”
Ferrante said he expected the MOC would make the request in late March or early April. Though Connecticut was successful in winning approval for its program, Ferrante added, ‘there’s no guarantee that other state attorneys general would allow this to move forward.”
A state-level program in Massachusetts, modeled after the Connecticut program, would be voluntary, Ferrante said. ‘It would not be a blanket assessment on every gallon of heating oil sold by every retailer.”
Even if a program were approved in Massachusetts, it would require strong support to succeed, Ferrante noted.
John Huber, president of NORA, did not return calls asking for comment on the state-level program in Connecticut and the outlook for re-authorization of the national program. The association executives said they remained committed to winning re-authorization for NORA.
Cota of the Vermont group said, ‘We have not given up hope that we can get NORA reauthorized, and we are working very hard on that.”
Cota pointed out that Rep. Peter Welch (D-Vt.) is on the Energy & Commerce Committee in the U.S. House of Representatives. ‘We are hopeful that the congressman from Vermont and Senator [Jeanne] Shaheen from New Hampshire can help convince their brethren to pass NORA and we can get it back. It would be good for the oil heat industry and it would be good for our customers.”
Ferrante of the MOC said the overriding strength of a check-off program such as NORA is that ‘Congress approves it, the industry votes on it,” and it is mandatory.
‘When we voted on NORA initially there was overwhelming support for the program,” Ferrante recalled. ‘The beauty of it is that it captures everyone ‘ every retailer, every gallon of fuel purchased in every participating state. I would call it the Holy Grail of the industry. We have to get it back.”
Though optimistic that NORA will be re-authorized, Ferrante said the challenge is ‘formidable.”
He cited the biggest challenge as ‘non-activity” in Washington. Still, the team of people involved in the NORA program and who are trying to get it reauthorized are very dedicated and very hopeful,” Ferrante said.
‘It’s the retailers who are really going to be able to help us win reauthorization,” Ferrante said. ‘We hope that when a retailer tells his or her tale to their local congressperson that’s going to be the thing that moves him.”
Gene Guilford, president of CEMA, explained in a recent Q&A via email that the state-level program in Connecticut is like NORA, but different in certain crucial respects:
Fuel Oil News: Why did CEMA create the Connecticut Oilheat Alliance?
Guilford: Given the extraordinary pressure being brought to bear by the natural gas industry in our market, and efforts by government to seemingly help natural gas, and the constant presence of national energy companies in the paid media advocating natural gas ‘ we believed we needed to create the wherewithal to promote and defend oil heat.
Fuel Oil News: How long did it take for support to coalesce? Did you have to campaign or was there a grass roots movement to do this?
Guilford: We began promoting this to our members prior to this heating season and it’s entirely a grassroots effort. Given the extensive antitrust clearances we needed to secure from state and federal authorities in order to do this [see the Connecticut Oilheat Alliance website at ctema.com/oilheat_alliance/</I<] the effort is entirely presentational and dealers have to decide for themselves whether or not to participate.
Fuel Oil News: Does it work just like NORA, but at a state level? Are there any noteworthy differences?
Guilford: Essentially, yes. The primary exception is that under NORA’s law one could not compare heating oil to competing fuels. There is no restriction for the voluntary program.
Fuel Oil News: Have other state associations in the industry taken note or consulted you about this step?
Guilford: We’ve met with the other New England states and the associations in the New York City, Long Island, New Jersey region.
Fuel Oil News: What would you advise a state association that was considering creating its own Oilheat Alliance?
Guilford: The antitrust issues are numerous and seeking approval from state and federal authorities takes time. Great care and patience is necessary in pursuing this. The reason we had NORA was due to the very limited success of voluntary fundraising efforts. Everyone knows that under any voluntary effort not everyone participates. That remains a major frustration with no solution.
Fuel Oil News: Finally, would there be a conflict or overlap if NORA were re-authorized?
Guilford: We maintain our commitment to get NORA reauthorized and back in business. Our program states in writing that whenever NORA comes back this voluntary program goes away.
SIDEBAR
The ABCs of the Connecticut Oilheat Alliance
From 2001 until February 6, 2010, heating oil retailers paid twenty points per gallon (.0020) on all gallons they purchased at wholesale for the National Oilheat Research Alliance (NORA).
The money raised via this ‘check-off” program was used to promote oil heat, high-efficiency oil heat heating, energy conservation with oil heat, and to promote the industry generally.
Congress failed to reauthorize NORA before it expired on February 6, 2010, and still has not done so, despite lobbying efforts of 23 states that participated in the program.
A bit more than a year ago, according to the CEMA E-Marketers Report, CEMA’s Board decided it could not ‘wait any longer for a Congress that is frittering away its time and your future and the future of our industry. So we decided we would try to recreate NORA and run it ourselves here in Connecticut. We need to get back into the business of promoting what is best about oil heat and the oil heat industry and the tremendous value you and every oil heat marketer brings to Connecticut.”
CEMA petitioned the Connecticut attorney general and the U.S. Federal Trade Commission for permission to re-create NORA by contracts between retailers and wholesalers. It pointed out that if every retailer signed a contract with all of their wholesalers agreeing to allow each wholesaler to charge twenty points (.0020) per gallon of all heating oil purchased, some $650,000 to $700,000 could be raised, and those funds could be used for consumer education and to promote oil heat. The Connecticut Attorney General and the U.S. Federal Trade Commission approved CEMA’s Connecticut Oilheat Alliance in the summer of 2012.
The program relies upon wholesalers being willing to collect the voluntary fee per gallon, and on retailers signing contracts with wholesalers to begin the process.
