Association Projections for 2016
FON asked a range of regional and national association executives to comment on their plans for 2016. The request came out at a busy and distracting time of the year (over the holidays) and also at a time when some associations had yet to formalize their plans for 2016. However, we have received the following responses. Of course, a lot can changes as the months pass and the year moves forward.
Petroleum Marketers Association of America
PMAA President Rob Underwood responded with the following initiatives as being hot-button items.
Placarding: PMAA continues to work with Congress and the Pipeline and Hazardous Materials Safety Administration to rescind a recent interpretative guidance for placarding on cargo tank trucks. PMAA has secured language in the Senate Committee on Commerce, Science, and Transportation bipartisan bill known as the “SAFE PIPES Act” which seeks to improve the safety of the nation’s oil and natural gas pipelines and overhaul procedures at PHMSA.
Section 4 of the bill is language that would force PHMSA to revert back to placarding to the lowest flash point for both split loads and alternating straight loads of diesel fuel and gasoline. This is a cost saving provision for marketers because they can ship diesel fuel, gasoline and heating fuel in different compartments of the same cargo tank vehicle under a gasoline placard, as well as ship straight loads of gasoline or diesel under the gasoline placard instead of affixing or switching multiple product placards.
The provision can also benefit emergency responders because it reduces the number of placards on the cargo tank which makes identifying the appropriate response in an emergency simple and reliable. Action on this bill is likely in early 2016. On the regulatory side, PMAA joined on as a signatory to a petition for rulemaking at PHMSA that would allow placarding to the lowest flashpoint for both split loads and straight loads. PMAA is also working with PHMSA officials to withdraw the new interpretation that prevents placarding to the lowest flash point for straight loads.
New Ozone Standards: PMAA plans to work with Congress to repeal the new federal ozone standard. Although the 70 ppm standard is not as low as many feared and is considered a compromise between industry and environmental interests, the ozone final rule still places a burden on some counties which could mean RFG and lower RVP fuels. PMAA will continue to support Rep. Flores’ (R-TX) bill known as “The Ozone National Ambient Air Quality Standard Deadline Harmonization Act” which brings certainty to states and localities by allowing adequate time for implementation of the 2008 standard and resulting air quality benefits. PMAA also continues to support additional bills introduced in the Senate to roll back the onerous ozone regulation.
RFS Reform/Blendwall: Although EPA finalized the 2014-2016 RFS volume requirements, the fight is not over. While PMAA was pleased that EPA used its waiver authority to lower the corn ethanol mandate, PMAA continues to aggressively oppose any E15 mandate without a pathway to demonstrate legal compatibility for UST systems and liability protection. Prior to the announcement PMAA met with the White House Office of Management and Budget (OMB) to reiterate marketers’ concerns over demonstration guidelines adopted by the EPA Office of Underground Storage Tanks which do not provide a realistic pathway to legally dispense E15 in existing UST systems. Next year, PMAA will be continuously reminding the EPA and Congress of the compatibility issue.
Underground Storage Tanks: While PMAA is pleased with the gains made regarding our concerns with the UST final rule (reducing annual compliance costs from $6,966 to $2,377 per station per year), more work must be accomplished to further reduce compliance costs and burdens imposed by the final rule. Specifically, PMAA believes the current test method for sumps can be improved to reduce compliance costs and better protect the environment. PMAA has developed a less costly and more effective alternative sump test method and is working with ASTM and PEI to incorporate it into new and existing industry standards for tank inspection and testing. PMAA has also provided guidance to state association executives on methods for state regulators to make implementation of the UST rule on the state level less burdensome. Due to these ongoing efforts definitive compliance guidance is not available at this time. However, given the three year implementation schedule for most provisions under the rule there is plenty of time to get clarifications and changes needed for a compliance guideline.
Menu Labeling: Although the FDA delayed compliance with the menu labeling rule until December 1, 2016, this is still not enough. PMAA continues to support passage of the “Common Sense Nutrition Disclosure Act,” (H.R. 2017) (S. 2217) which would modify the Menu Labeling language in Obamacare and give retailers the flexibility they need to comply with the menu-labeling regulations.
Fuel Neutral Policies: PMAA will continue its fight to highlight fuel neutral policies. Unfair policies that favor one fuel over another, “fuel switching,” are threatening thousands of home heating oil businesses. Policy makers fail to acknowledge recent technological advances in heating oil efficiency. New high efficient oilheat equipment combined with the near elimination of sulfur content and BioHeat and plentiful supply makes heating oil cleaner, cheaper, more efficient, safer with a lower carbon footprint than natural gas. Unlike electric and natural gas utilities, oilheat infrastructure was developed without taxpayer or ratepayer money and none is needed to maintain it. Incentivizing oilheat customers to make costly conversions to natural gas is not economically rational, violates current fuel neutral policy and unlikely to result in lower heating costs or emissions.
Additionally, Congress should be treating both oil and natural gas pipelines equally but recent legislation favors natural gas over oil. The House passed the “North American Energy Security and Infrastructure Act” (H.R. 8) which concerns PMAA because it is not fuel neutral since it would expedite interstate natural gas pipeline approvals at the Federal Energy Regulatory Commission and does nothing to expedite oil pipelines. Rather than deregulate the natural gas pipeline permitting process, Congress should require that regulators and gas companies increase system efficiency by requiring that the thousands of miles of existing natural gas pipelines that are aging or obsolete be repaired or replaced. PMAA continues to urge the Senate not to include the language in future comprehensive energy policy legislation.
Additional Issues: Continue the fight over the Department of Labor’s proposed manager overtime rule changes, which would force businesses to pay exempt employees a minimum of $50,440 in 2016 with automatic threshold increases every year thereafter. The proposal more than doubles the current minimum salary needed to comply as exempt from overtime requirements. PMAA will be supporting legal and Congressional efforts to delay and/or kill the rule when it’s finalized – likely finalized by summer 2016. Also, PMAA will continue to monitor the ULSD corrosion issue. EPA is conducting a field study to determine the cause of ULSD corrosion in USTs. The EPA study is expected to be completed by the end of 2015 and/or early 2016 at which time the agency will consider whether new regulations to prevent ULSD corrosion are needed. PMAA plans to meet with EPA once the report is finalized. PMAA will also continue to fight a 10 micron diesel fuel filter mandate at NCWM as well as continue to support the higher elevation states in their fight to maintain 85 octane motor fuel at ASTM and NCWM.
Massachusetts Energy Marketers Association
Michael Ferrante, president of the Massachusetts Energy Marketers Association offered the following perspective on 2016:
As MEMA enters 2016, there are a number of very important challenges facing the industry, in tandem with some very valuable opportunities to maximize on the industry’s behalf.
From a regulatory and legislative perspective, MEMA continues to focus primarily on two key state issues: derailing state legislation that could impose a 30-40-cent per gallon “carbon” tax on home heating oil and diesel fuel; and playing a key role in stopping a major regional natural gas pipeline expansion effort that must pass through Massachusetts to ultimately be successful.
On the carbon tax, MEMA has spent considerable time working with key legislative leaders to educate them on the advancements the industry has made over the past 5 years with Bioheat fuel blends that have significantly reduced the carbon intensity of the fuel. In addition, MEMA has educated lawmakers on the economic impact a carbon tax would have not only for consumers but also on retail heating oil dealers who are vital to the energy needs of the state and the overall economy.
On the well-publicized natural gas pipeline matter, MEMA held successful meetings in 2015 with the Massachusetts Attorney General and her staff as well as key government officials to explain the industry’s opposition to the project that has a projected cost of $8 billion. MEMA cited concerns that Massachusetts electric rate payers would shoulder over 50% of the $8 billion price tag, and that additional natural gas capacity is not needed since the heating oil industry along with a key supplier of liquefied natural gas have long-demonstrated their continuing roles in helping to produce electric power. MEMA was pleased when the Attorney General released a comprehensive report in November of 2015 supporting MEMA’s position and finding that the region does not need additional pipeline capacity at this time. The natural gas utilities and the big pipeline companies continue to press for federal approval of the projects and MEMA will continue to be a voice of opposition in 2016.
On a federal level, MEMA will continue to work with its Washington-based government affairs team from the New England Fuel Institute and the Petroleum Marketers Association of America on all energy, environmental, transportation and small business matters that come before Congress and federal regulatory bodies.
Moving into 2016, MEMA is most pleased to be able to continue the development and implementation of programs funded through the National Oilheat Research Alliance. MEMA will continue to use its NORA funds to advance consumer awareness of oil heat, BIOHEAT fuel and energy efficiency through television, radio, print, internet and social media channels; and in partnership with the National Biodiesel Board. MEMA will also continue to offer comprehensive industry training programs to all company owners, customer service personnel and heating equipment technicians.
MEMA will also continue its leadership role with the American Energy Coalition to channel voluntary contributions from the industry to develop advertising and marketing materials to counter natural gas utility campaigns and to educate consumers on the facts surrounding natural gas.
New York Oil Heating Association
The following was provided by Rocco J. Lacertosa, CEO of the New York Heating Oil Association.
In 2016 we hope to build on the extraordinary progress we have already made on increasing the percentage of biodiesel used in heating oil sold in New York City.
NYOHA, which was instrumental in achieving a B2 heating oil standard in 2012 as well as key reductions in sulfur and a phase out of heavy residual oil, is supporting an effort in the New York City Council that would increase the fuel standard to B5 in the next heating season and we are discussing pragmatic ways to achieve higher blends over time.
NYOHA continues to be a proud participant in the Mayor’s Clean Heat Task Force and recently helped launch the NYC Retrofit Accelerator which provides technical assistance to buildings that wish to go green.
As an industry we have risen to the challenge of embracing a cleaner and greener future with boldness and vigor. And we have proudly led the country in promoting cleaner heating fuels. In the year ahead, we will continue to advocate for our companies and our customers who want a balance of affordability and sustainable fuel products. This always comes with its challenges but we are ready to take our fuel to the next level so that oil heat remains viable and indeed a product of choice for decades to follow.
Within the association itself, the focus will be on several fronts; education, recruiting new people into the industry, continuing to champion Bioheat® here in New York City and increasing revenue for the association.
We are in the final stages of completing a joint training facility funded by NYOHA, OHILI and NORA. The facility will house Dr. Tom Butcher who will conduct research on equipment for one. In addition, there will be NORA Certificate programs and other training put on at this facility which is located in Plainview Long Island.
Further we are looking for opportunities to recruit students from this and other trade schools into the industry. Most recently I, along with Mike Devine of Amerigreen gave a presentation to a group of students in the HVAC program. Mike spoke on the technical aspects of Bioheat® and I spoke about my career in the industry and what it was like to work in the business. My talk continued with a discussion about opportunities for them in this industry since our workforce is aging and we need new people.
As the industry contracts because of acquisitions, conversion to other fuels we are challenged to do more with less. The idea of increasing dues is not something that I think would attract and retain members. Therefore, associations must be creative in managing the expense lines.
Non-dues revenue is one area NYOHA is targeting as a way to keep dues levels relatively low in order to retain existing members and market the association to prospective members.
We have partnerships with associate member companies where we get a portion of revenue that they receive from services they provide to our dealer members and we’re looking for ways to increase that.
In addition, I am looking at increasing training through seminars and webinars where we can charge a fee for those programs.
Who should join and why should they join, if they are not already a member? Our target company is the Full – Service Dealer in the 5 Boroughs of New York City. The obvious answer to why a company should join is that there is strength in numbers. NYOHA and its lobbyist are constantly at the table with City and State government discussing programs and testifying on bills and policy issues that can affect our constituency. In addition, NYOHA provides a vast amount of information to its members on many different industry related matters and non-members are missing that information.
Oil Heat Institute of Rhode Island
Roberta J. Fagan, executive director of the Oil Heat Institute of Rhode Island supplied this outlook.
As 2015 comes to a close and we look ahead to the New Year it is a great time to recap what has taken place here in Rhode Island.
In April the board of directors of the Oil Heat Institute appointed me to the executive director’s position. It has been a world wind of learning and professional development since; riding on the heels of the record setting snow and cold temperatures of last heating season.
2015 came in like a lamb but by the third week in January we were thrown into a record setting cold winter with equally record setting snow fall. Our customers received their fuel with little to no disruption even though it was at times physically and logistically challenging to deliver safely. Our skilled, professional and hardworking service and delivery people stepped up to the challenge and kept our RI customers warm. A welcome and positive change was the price of home heating oil. Customers enjoyed fuel prices that averaged approximately $1 less per gallon than the previous year.
The heating season of 2015-2016 is proving hard to predict. Unseasonably warm temperatures and the low cost of home heating oil is leaving many oil companies guessing what the rest of the winter will be like. Mother Nature and time will only tell…
Rhode Island seems to be starting to enjoy more economic stability. The unemployment rate is more in line with the rest of the country at 5.2% as reported in November 2015. (Bureau of Labor Statistics/US Dept of Labor). Governor Raimondo has made job creation her top priority her in RI, but some disagree with her bridge infrastructure and job creation plan “Rhode Works”. The plan was unveiled in June just before the end of the legislative session. Rhode Works is the governor’s solution to the decrepit bridge crisis we have here in Rhode Island by installing tolling gantries on certain roadways in Rhode Island which would toll Class 8 and above trucks. While most fuel oil delivery trucks will not be tolled obviously there are trucks in our industry partner’s fleets that will be subject to the tolls. The Governor as well as top legislators would like some form of the plan approved in the early part of 2016 legislative session. The RI Trucking Association as well as the Stop Tolls RI have launched campaigns to prevent tolls in Rhode Island from becoming a reality. More information can be found on these websites: www.ritrucking.org www.tollfreeinterstates.com and www.stoptollsri.com for up to date information.
Rhode Island along with the other New England states participated in the largest oil heat consumer research study conducted by Warm Thoughts Communications. The study revealed hard truths about our customer base, their attitudes toward oil heat, intention to convert as well as their understanding about Bioheat. The study exhibits that our industry has an opportunity to slow down the conversation rate by educating and promoting the benefits of the advanced fuel that is now being sold in most New England states. Here in Rhode Island we have the greatest challenge, where the rate of conversion to Natural Gas is the highest compared to our neighboring states. At the same time our Biodiesel Mandate gives us a greater advantage to promote the benefits of staying with oil heat – higher efficiency, cleaner burning, and domestically produced low sulfur heating oil with a 3% blend of biodiesel in every gallon. Throughout the month of January and February the Oil Heat Institute of RI will be running a radio campaign as well as a print advertisement campaign to remind our customers why sticking with oil heat is the smart, efficient, economical and environmentally friendly way to heat their homes.
The Oil Heat Institute will also be offering more continued educational programs. NORA funds were utilized to offset tuition for a Basic Oil Heat 160 hour course that ran July – December at the New England Institute of Technology. Students also qualified for the RI Workforce development grant to further offset the cost tuition. In November a free course was offered to members and their employees, “Keeping your customers with oil heat”. The course took data collected from the Warmthoughts Consumer Research study to illustrate and communicate the benefits of sticking with oil heat. It was a half day quick refresher course that aimed to give our employees the tools and information they need to positively interact with and retain customers. In the late spring 2016 OHI will be offering the Pipe Fitters II class and a workshop for our front line Customer Service Technicians.
Lastly our new website will be launched in the coming weeks. The updated site will be more of an educational and resource tool for our members as well as the consumers we serve. Highlights of the new site will be an interactive dealer’s page, a savings calculator, conservation tips, and links to other helpful websites. Visit www.warmth4ri.com in mid-January to see the new changes!