NEON: NEFI Energy Online News

Frequently Asked Questions Regarding IRS Dispenser Decals
As NEFI has alerted members via email, the IRS has stepped up enforcement of decals required on all pumps dispensing diesel fuel and kerosene tax-free. NEFI now offers these labels. View the Action Alert and label order form. We have been receiving several questions regarding this regulation:

Are the IRS decals required on all dispensers and pumps, including dispensers on trucks and racks?
No. First of all, a "dispenser" means any device in which product flows directly into the tank of a diesel engine motor vehicle or equipment. It does not include residential heating oil tanks, petroleum trucks, or loading racks. Second, it is only required for dispensers of dyed diesel fuel and dyed kerosene; as well as clear kerosene sold tax-free from blocked pumps.

I have the newer EPA-mandated "sulfur content" labels already; do I still need the IRS one?
BOTH ARE REQUIRED. This is the reason for several reported citations. Many fuel dealers are under the mistaken belief that the EPA's sulfur dispenser decals--which also provide notice on nontaxable uses of these fuels--supersede the IRS labels. This is incorrect. Both the IRS and EPA labels are required despite their apparent redundancy, as well as any other labels required under federal law (such as the biodiesel labels) or state/local law. Also, decals may not obscure one another and must be applied correctly.

Are end-users with on-site dyed diesel or dyed kerosene dispensers required to have these decals?
Yes. All end-users (contractors, farmers, universities, etc) with on-site storage that dispense dyed diesel fuel or dyed kerosene for use in off-road equipment must label their pumps appropriately. The owner of the tank is responsible for making sure the dispenser is labeled correctly.

Where do I get the decals? Who do I contact with additional questions?
As a service to the industry, the NEFI Legislative & Regulatory Action Center now offers the IRS "tax exempt" decals, as well as the EPA "sulfur content" and FTC biodiesel decals. To obtain them, visit www.nefiactioncenter.com, call Dave at (617) 923-5022 or email dave@nefi.com. NEFI members with additional questions regarding compliance may email NEFI Regulatory Counsel Mark S. Morgan, Esq. at mark@nefi.com.

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NEFI CONTACT: Jim Collura, VP for Public Policy (jimcollura@nefi.com)

Congress is currently in a "state work period" and is in recess until September 8, 2008.

Bipartisan 'Gang of 10' Energy Proposal May Be Voted on This Sept.
A group of ten bipartisan lawmakers--five Democrats and five Republicans--have proposed what they call a "compromise solution" to the energy debate, which has reached a fever pitch despite the Congressional recess. A vote may come on this legislation, or similar legislation, in both House and Senate chambers this fall.

The proposal would allow drilling in the Eastern Gulf of Mexico and the Southeast Atlantic, while raising certain taxes on major oil companies and leaving the ban on ANWR drilling in-place. It would also fund a $20 billion "Apollo program"-like project to transition 85 percent of new motor vehicles to non-petroleum-based fuels within 20 years. See a full summary. Note that this legislation does NOT include any solution to deal with excessive speculation in the commodities markets. PMAA working to change that, with support from NEFI and other coalition allies, are pushing heavily for the inclusion of anti-excessive speculation measures if this or any other energy legislation this fall.

The members of the "Gang of 10" include Senators Kent Conrad (D-ND), Saxby Chambliss (R-GA), John Thune (R-SD), Lindsey Graham (R-SC), Johnny Isakson (R-GA), Bob Corker (R-TN), Blanche Lincoln (D-AR), Mary Landrieu (D-LA), Mark Pryor (D-AR), and Ben Nelson (D-NE). The measure has received a mixed response from other members of Congress, and it is unclear if their proposal will be taken up on the Senate floor. Democratic Presidential Candidate Barak Obama has praised the proposal, while Republican Candidate John McCain has not yet taken a position. Both are U.S. Senators and would have an opportunity to vote for the measure if it is taken up this September.

Meanwhile, failure by Congress to pass energy legislation before the August recess is also being taken advantage of by Republican leaders and Congressional candidates, who last week continued to debate energy policy in an empty U.S. House chamber. They continued their "off-shore drilling" protest this week, as certain Republican members of Congress spread rumors on FoxNews and elsewhere of a possible GOP-led government shutdown.

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Recent Events Highlight Need For Energy Trading Oversight
Sometimes you don't know you're being robbed until the thieves are running out the door. Recent energy market events continue to shine light on the need for comprehensive reform of the energy commodities markets.

• A couple of weeks ago, the CFTC--under the radar--reclassified a major trader from a commercial or "physical" trader to a non-commercial trader. The trader held a position with as much as 460 million barrels of crude oil, or 23 days of U.S. supply (read the article here).

• Then, over the weekend, Russia invades Georgia, threatening important Georgian pipelines and shutting them down, at least temporarily, sending oil prices DOWN???

• Earlier this week, the Wall Street Journal ran a front-page story about a mysterious spike in cotton futures that sent traders in a frenzy, not because of some unexpected supply disruption, but because it was completely unexplainable. The Journal attributed the event to lack of oversight in the futures markets, and the ability of some traders to bid up commodities by taking large positions off-exchange or through trading exemptions (read the article here, subscription required).

• The Washington Post also ran an article, focusing on how sovereign wealth funds, massive investment pools run by foreign governments, are now huge players in the markets, trading oil, corn, cotton and other vital U.S. commodities. They trade through unregulated "swap dealers" on Wall Street. (See the article here.)

Congress MUST tighten the rules these guys play by. Enough is enough.

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Your Voice Matters In This Important Election Year--Tell Them Your Mind
Of course you can always access the NEFI Legislative Action Center online to send letters or make phone calls to lawmakers, and get important industry Action Alerts. But with members of Congress in their home states and districts through Labor Day weekend, now is a great chance for some face time. THEY NEED TO HEAR YOUR STORY. Even if the member has been supportive of our issues, EVERY MEMBER MUST BE VISITED and pressed to act.

To arrange a meeting, follow these simple steps:

(1) Visit www.capwiz.com/nefi and enter your zip code under "Find Your Officials" on the right side. If you live in a split district, it may bring you to a screen asking for the last for digits of your zip code or street address.

(2) In the next screen, under "President and Congress," click on each name for Senators and your Representative to get their member info page.

(3) In the member info page, click the tab "contact" and call the main state or district phone number listed on that page.

(4) When you call, tell them you would like to set up a meeting and ask for the scheduler. Tell the scheduler who you are and that you have insight on the energy crises and how it is impacting your customers, and practical, immediate-term solutions.

(5) ON THE PHONE AND IN OFFICE WITH THE MEMBER, BE HONEST AND FRANK - DON'T HOLD BACK. Your voice is the most effective we have in the industry!

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Contact: Mark Morgan, NEFI Regulatory Counsel (mark@nefi.com)

STUDY: Off-Road Diesel Fuel Market Will See Urea Demand by 2013
As members are well aware, the EPA transition to ultra-low sulfur diesel fuel and tighter emissions standards for diesel engines has transformed the market. But we are just at the beginning of a major transition. Over the next few years, diesel fuel manufacturers will be required to meet even stricter emissions standards as the EPA's rules tighten. Most diesel engine manufacturers are turning to Selective Catalytic Reduction (SCR) systems in order to meet the new standards, which require the urea additive in order to "clean" the diesel exhaust stream. That means an additional tank on-board the vehicle or equipment to store the urea, and the infrastructure to fill it.

A national working group of called the SCR Diesel Workgroup, made up of engine and auto manufacturers, urea producers, policy makers and other stakeholders (including NEFI), are working hard to insure that there is adequate supply of urea and the infrastructure to meet the demand before these engines hit market. A new study presented to the workgroup by the Engine Manufacturers Association expects fuel dealers to be an integral in meeting off-road urea demand. While much smaller when compared to the expected on-road demand for urea, off-road urea demand is still expected to be as much as 1.53 million gals/year in 2013 as new ultra-clean diesel engines are introduced in the off-road market, and rising to as much as 78 million gals/year by 2018. They see off-road diesel fuel marketers supplying about 40 percent of market demand (with retail fueling stations supplying another 40-43 percent). The study sees bottles and totes delivering urea product to off-road consumers through 2014, with heavier volumes requiring on-site storage and dispensers (especially for heavy duty diesel applications). Find out more on SCR diesel. If you would like a copy of the study mentioned above, email jimcollura@nefi.com.

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FTC Proposes Rule to Prohibit Manipulation In Petroleum Industry
The Federal Trade Commission (FTC) has issued a proposed rule today targeting "manipulation" within the petroleum industry. In issuing the proposed rule, the Commission is exercising authority provided by the Energy Independence and Security Act of 2007 (EISA) enacted in December of last year. The rulemaking process began with the publication of an Advance Notice of Proposed Rulemaking (ANPR) announced on May 1, 2008. In response to the ANPR, the Commission received 155 comments, most of which were submitted by consumers, with the rest coming from industry members, trade and bar associations, academics, and other federal and state government agencies. PMAA had submitted comments on the rule. The Commission expects to conclude the rulemaking process by the end of the year.

The NPRM issued today seeks public comments regarding the proposed rule the FTC has developed pursuant to Section 811 of EISA. EISA gives the FTC new authority to promulgate regulations prohibiting "market manipulation" in wholesale petroleum markets. Specifically, Section 811 states that it is against the law for any person, in connection with the wholesale purchase or sale of certain petroleum commodities to use any "manipulative or deceptive device or contrivance, in contravention of such rules and regulations as the Federal Trade Commission may prescribe as necessary or appropriate in the public interest or for the protection of United States citizens." Fines are up to $1 million per day, per violation.

The FTC was under pressure by Congress to expedite the rulemaking process, in light of rising energy prices. In 2005, similar authority was granted over natural gas spot prices to FERC, which last year expanded this authority to mean manipulation that has an impact on these prices, including futures trading manipulation. FERC exercised this new power in seeking a $291 million fine against Amaranth for allegedly manipulating natural gas futures through the Enron Loophole in 2006. With the FTC now after similar authority over the petroleum spot and futures markets, it will no doubt raise protests by the Commodity Futures Trading Commission over turf. Read the official FTC press release and get the links to the rule.

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U.S. EPA Rejects Texas Governor's Ethanol Mandate Waiver Request
The U.S. EPA denied a request this week made by Texas Governor Rick Perry to temporarily reduce the 9 billion gallon federal ethanol mandate for gasoline. Perry asked the EPA in April to reduce the 2008 mandate by half to 4.5 billion gallons, saying demand for ethanol is raising prices for cattle feed and driving up food prices and hurting the Texas economy. The EPA denied the waiver request on the grounds that the underlying petition did not show the mandate was causing "severe economic harm," a key requirement for granting a waiver. On the contrary, the EPA said the ethanol mandate is "strengthening the nation's energy security and supporting Americas' farming communities." The EPA said the Texas denial would serve as a framework for future waiver requests, which are expected as ethanol comes increasingly under fire from a broad array of interests. Environmental groups, concerned about the affect biofuels have on green house gasses, water quality and biodiversity, supported the waiver.

Senator Kay Bailey Hutchinson (R-TX) and 11 GOP co-sponsors tried to head off a possible waiver by introducing legislation freezing ethanol quotas at the current level. Last week, Federal Reserve Board Chairman Ben Bernanke called for the removal of the 51-cent-a-gallon tariff on imported Brazilian ethanol that keeps domestic ethanol prices artificially high. The EPA received over 15,000 public comments on the Texas proposal, roughly split between those in favor and those against. Regulatory Counsel Mark S. Morgan, Esq. (mark@nefi.com) submitted comments supporting the temporary waiver provided it was limited to Texas and that the EPA adopt a sensible, simple and flexible procedure to address future waiver requests that, recognizes regional market conditions and avoids disruption of regional and national gasoline supplies. Perry called the decision "a mistake" and "bad public policy," but has not indicated whether he plans to sue EPA over the decision.

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Click here to register now.

Click here to view the conference agenda.

See who is exhibiting.

See who is attending.

Silent Auction At 2008 Visions Conference - Items Donated To Date

NEFI will be sponsoring a "Silent Auction" fundraiser at the 2008 VISIONS Conference (www.visions2008.org) to benefit PMAA's Small Business Committee (SBC) Political Action Committee (PAC). This PAC supports candidates who share our industry's national goals. The Silent Auction will run throughout the VISIONS Conference. PLEASE SUPPORT THE EFFORT BY DONATING AN ITEM TODAY! Click here or contact Jim Collura at (617) 923-5016 or jimcollura@nefi.com to inquire about donating an item or making a direct contribution to the PAC.

Thank you to our donors! (as of August 14, 2008)

Dave Eagle (of Arlex Oil, Lexington, MA) -- 2 Patriots Tickets
Larry Richmond (of COCARD, Beverly, MA) -- 2 Boston Red Sox Tickets
Marjorie Wong (of Global Petroleum, Waltham, MA) -- Blue Ray Player
Jeff Mushnick (of Medway Oil, Medway, MA) -- 2 Patriots Tickets
Jeff Mushnick (Medway Oil, Medway, MA) -- "SkeeterVac" LPG Mosquito Remover
John Maniscalco (of the (New York Oil Heating Assoc.) -- Dinner at Morton's Steakhouse

• The 2009 North American Heating and Energy Expo is scheduled for June 9-10, 2009 at the Hynes Convention Center. Booth sales are underway and the most prominent spaces are going fast. Associate members and past exhibitors have priority, so make sure to reserve your booth space now! For information and to reserve online go to www.nefi.com/expo.

• NEFI's 2008 Fall Energy Conference to Napa Valley, September 23–28, 2008. The trip is getting close to selling out, but there are a few spots left! Act fast while space is still available. Tracy is currently working to arrange a possible refinery tour for Friday, Sept. 26. Call him at 617-923-5015 or email tracy@nefi.com with questions or view the details about the trip and see a registration form here. Thirty NEFI members and friends are already registered for this multi-day event, which includes private a tour of a local Valero refinery.

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Welcome New NEFI Members:

Welcome New NEFI Members:

County Oil Delivery
Martha Harvey
51 Lepper Rd.
Morrisville, VT 05661
Phone: 802-888-5333
Fax: 802-888-5301
County Oil is a Fuel Dealer providing Fuel Oil products

Mansfield Oil Co., Inc.
Kathy McDonald
945 East St.
Mansfield, MA 02048
Phone: 508-339-4473
Fax: 508-339-6788
Email: theflyingnonny@msn.com
Web: www.mansfieldoil-ma.com
Mansfield Oil is a Retail Fuel company providing full service.

Ferri Oil Service
Anthony Ferri
PO Box 292
Walpole, MA 02081
Phone: 508-668-6180
Fax: 508-639-9608
Email: office@ferrioilservice.com
Web: www.ferrioilservice.com
Ferri Oil is a Retail Fuel Dealer providing Diesel-off road and full service of oil heat systems.

Buchanan's Oil
Joseph Geary
PO Box 857
Mansfield, MA 02048
Phone: 508-543-7577
Email: jdgeary@buchananoil.com
Web: www.buchananoil.com
Buchanan's Oil is a Retail Fuel Dealer providing sales and service of gas, heating and air-conditioning.

Maine Potato Growers, Inc.
Allen Green
50 Parsons St.
Presque Isle, ME 04769
Phone: 207-764-3131
Fax: 207-764-7143
Email: algreen@mpgco-op.com
Web: www.mpgco-op.com
Maine Potato Growers is a Retail Fuel Dealer providing Diesel-over the road and off road, Gasoline and Lubricants.

Joyal Fuels
Arnold Rivers
2136 Main St.
Fairfax, VT 05454
Phone: 802-849-6066
Fax: 802-849-6190
Joyal Fuels is a Retail Fuel Dealer.

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Sponsor This Newsletter!
NEFI would like to thank this month's NEON Sponsor, Irving.