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Portsmouth Summit Tackles Heating ‘Katrina’

October 13, 2008

By Wood, Roger

The approaching winter will bring challenges and hardships for both heating oil customers and the oil dealers that service them.

That was the bottom line, and the reason for an Aug. 18 summit at the Sheraton Harborside in Portsmouth. The Boston-based National Consumer Law Center sponsored the conference, with a goal of identifying short- and long term solutions to the heating oil crisis.

One hundred representatives from the oil industry, consumer advocacy groups and state and local governments in New Hampshire and other Northeastern states took part.

One attendee summed up the concerns of many, calling the upcoming heating season New England’s “Hurricane Katrina.”

There was a consensus in the room that sharply higher fuel costs will hit elderly, low-income and disabled people the hardest.

John Tobin, executive director of New Hampshire Legal Assistance, said that he’s worried about this winter in particular. “Our constituency is low-income and elderly people, and we see that their income hasn’t gone up, but the cost of these basic necessities has skyrocketed, and we’re very worried about their ability to survive”

Tobin added that “there’s really a strong consensus that this is an urgent problem and that the state and federal political systems need to respond.”

As Jud Dolphin, executive director of the Maine Chapter of the American Association of Retired Persons, noted bluntly, “we don’t want anyone to die this winter because we haven’t done preparation.”

Dolphin said that he wants to see federal Low Income Home Energy Assistance Program funding doubled, adding, “any congressperson who votes against that for whatever reason is doing the wrong thing,” he said.

Industry concerns

The skyrocketing cost of heating oil isn’t just affecting customers. Oil industry representatives at the conference pointed out that their industry will be feeling the pinch as well.

Shane Sweet, president of the New England Fuel Institute, based in Watertown, Mass., said that dealers are looking at a winter the likes of which they’ve never encountered before. He cited several issues affecting heating oil suppliers: “Lines of credit, cash requirements, customers paying more slowly because of higher prices, the need to communicate with advocacy groups and let their customers know what’s going on. These are issues that we’re working on day and night.

Sweet pointed out that oil dealers who operate on net 30 day payment requirements from customers can’t afford to wait 45 days, as they may have done before. “They have to collect their money on time, particularly if you add into the mix that the terminal suppliers and the banks are tightening up lines of credit or the payment terms for the dealers.”

Exeter oil dealer Andy Hartmann, owner of Hartmann Oil and Propane Inc., said that he is forced to ask customers for payments on delivery. “It’s nice to get your money on the spot if you have to, because a truckload of oil is $10,000. You can easily sell a million dollars worth of oil between Monday and Friday. I don’t have an extra million dollars kicking around that I can just wait for it to come in.”

Hartmann said his policy is to give customers a couple of chances to make timely payments before taking them off automatic delivery. Hartmann said that the cost of oil is virtually impossible to predict, because of the volatility of the commodity “I’ve seen in the past 90 days oil drop 15 to 18 cents in one day, after rising 29 cents a month before The price swings are out of control. Not only do you have to try to run an oil company, you’ve got to be a commodities broker, a banker, an attorney and a casino operator.”

Hartmann’s company serves some 7,700 customers who buy oil and propane He predicted that the current pricing and credit environment will drive some of the smaller dealers out of business.

The conference featured a number of “breakout” session at which participants discussed some of the issues of the oil heating crisis and were given the task of developing proposed solutions.

One of those solutions is to tap the New England oil heating reserve, some 84 million gallons held in storage But one participant called that a “drop in the bucket” compared to the billions of gallons of oil per year used in the Northeast

Another proposal would attack the heating problem through increased energy efficiency in homes and businesses. It would involve turning thermostats down, making heating system upgrades, adding insulation and providing education to customers.

One group pointed out that Massachusetts provides vouchers to pay for efficiency improvements in oil-heated homes. A proposed energy tax was floated to help provide funding for such vouchers. Another group tackled the cost of heating oil itself, suggesting that neighborhoods and communities form cooperatives to buy fuel at lower prices. Another proposal involved the formation of neighbor-helping- neighbor programs.

‘Information is power’

The issue of extreme heating oil hardships was perhaps explored most extensively. Several groups advanced ideas aimed at preventing tragedies for individuals and families unable to afford to heat their homes. Some of those proposals included: recommendations for communities to provide warming shelters for those driven from their homes; expanding the statewide 211 number to provide resources in case of a family heating crisis; involving faith-based groups to raise funds to help those most in need; and proposing consumer protection legislation for the purchasers of oil, propane and wood for heating.

National Consumer Law Center Senior policy analyst John Howatt, who conducted the session, pointed out that the ideas put forward during the day were just the beginning of the process. The plan now is to combine them into a comprehensive report.

“The objective of this meeting was to come up with some ideas that we could float before key decision-makers in governor’s offices, in the congressional delegation, and in the state legislatures around New England.” Howatt didn’t specify when a document would be ready, but said that he hoped it would be completed “in very short order.”

Participants generally felt that they accomplished something constructive at the conference Sweet of the New England Fuel Institute said, “I walk out of here knowing that at least 100 people who didn’t know what the full picture is now know what the full picture is. Information is power, and now they can go home and act on it.”

Tobin of New Hampshire Legal Assistance conceded that dealing with the heating oil crisis will be a tough haul.

“There is really a strong consensus that this is an urgent problem, and that the state and federal political systems need to respond. I think that the message is being repeated and repeated, I hope, and I’m an optimist that there will be a response. I only hope that it’s timely.”

Copyright Business Publications Inc. Aug 29, 2008

(c) 2008 New Hampshire Business Review. Provided by ProQuest LLC. All rights Reserved.




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