Oil Trading "Black Friday" Proves Markets Dysfunctional (And What NEFI Is Doing About It)
If there was any lingering hope in our minds that sanity and reason still exist in the futures markets, the events of Friday, June 6th have shattered them. Never before has the commodities trading world seen anything like it. By the close of the market, crude oil soared beyond $138 bbl. Heating oil reached its trading limits on the electronic markets and trading was temporarily shut down. Both gasoline and heating oil hit record highs (closing at $3.55 and $3.98, respectively). In fact, approximately one year's worth of heating oil was traded in one day that Friday. Why? Because the Transportation Minister in Israel sneezed at Iran and the markets, which are now fueled by greed, fear and paranoia, responded in kind.

On Tuesday, June 11, NEFI took its place on a special committee established within the principal "watchdog" (term used loosely) of the futures markets, the U.S. Commodity Futures Trading Commission (CFTC). The committee, called the "Energy Market Oversight Committee," was originally established at the recommendation of NEFI and its allies, in order to provide a forum for energy consumers, distributors, transporters, storage companies, small hedgers, etc., to speak out on their concerns regarding the markets. In a letter from Acting Chairman Lukken, NEFI was offered a seat. Read the letter to NEFI. Sean Cota (Cota & Cota, Bellows Falls, VT) was chosen to serve on behalf of NEFI. But the CFTC turned their back on the spirit of the committee by stacking it with financial interests rather than the "little guys" as was originally hoped. View the list.

The meeting was nothing more than an opportunity for market speculators to make their case before the CFTC that they are part of the solution, not the problem, and little of material was resolved, (as was reported by the LA Times). Toward the end of the meeting, Commissioner Bart Chilton (D) asked the traders in the room to raise their hand if they DO NOT do business with foreign government sovereign wealth funds. The room was notably quiet and no one raised their hands. Scary... foreign entities and governments may be using "dark market" to juice up their own oil exports or even worse, to undermine the U.S. markets. The group will meet again before year's end.

As members are well aware, this is a battle that NEFI has vowed to fight tirelessly, virtually day and night, for over two years now. NEFI staff has developed an expertise on the subject and has rallied allies across the nation into the fight. We have played a large role in passage of Close the Enron Loophole legislation (which will have no effect until the CFTC implements the new law by rulemaking and enforces it). But it's not enough. NEFI WILL NOT STOP FIGHTING THIS BATTLE UNTIL WE ARE CERTAIN THAT ALL TRADING IS FULLY TRANSPARENT AND SUBJECT TO ANTI-MANIPULATION RULES.

NEFI will be increasingly vocal on this issue, and you will also soon have an opportunity to get involved and get your customers involved in this fight. PMAA, in conjunction with NEFI and other groups, is about to launch a broad, national campaign entitled "SOS: STOP OIL SPECULATORS." Stay tuned.

-TOP-

NEFI & MOC Tell Senate Small Business Committee of Industry Challenges
This week, NEFI joined the Massachusetts Oilheat Council (MOC) in submitting testimony to Senator John Kerry (D-MA), Chairman of the Senate Committee on Small Business & Entrepreneurship. These comments explained in detail the challenges that the heating oil industry is facing, including ever increasingly strained lines of credit and diminished cash flow from customer receivables. Senator Kerry also has a seat on the Finance Committee, which has him well positioned to propose some sort of relief to the industry in lieu of the credit crunch situation. The testimony also addressed outrageous marketing campaigns by the natural gas industry and the increasing burden that federal regulations have had on the market. The testimony did shed a lot of light on the positive small business nature of the industry, the support for greater efficiency, biofuel blends and the LIHEAP program--despite harmful state leveraging programs like margin-over-rack. You can read the testimony online here or call Massachusetts Oilheat Council to request a copy at (781) 237-0730.

-TOP-

Small Business Administration: Major Overhaul of Size Standards Coming
Earlier this month, the Small Business Administration (SBA) held a public meeting on its comprehensive review of small business size standards to gain input from regulated industries whose size determination thresholds are likely to change. The SBA said the review is necessary because many small business size standards are currently based on annual gross receipts that are often skewed by fluctuating market forces and inflation that have no bearing on actual company size. As a result of these factors, many business owners including heating oil, propane, gasoline and c-store retailers are in danger of losing their small business status along with the benefits this status conveys including qualification for low interest loans, federal grants and exemption from or reduced compliance with an array of state and federal regulatory programs. Instead, the SBA wants to eliminate the gross receipts threshold and replace it with a size determination threshold based on the number of employees in a business. Currently, about half of all small business size standards already use an employee-based threshold. As members are aware, after lobbying by NEFI, the SBA recently agreed to change the size standard threshold for heating oil and propane dealers from gross receipts to an employee based determination because the soaring price of fuel distorted true business size under the gross receipts standard. A rulemaking is promised by years end, but NEFI is lobbying for an expedited process. For more information, contact NEFI Regulatory Counsel Mark S. Morgan, Esq. (mark@nefi.com).

AVAILABLE: NEFI Compliance Kit on Federal HAZMAT Registration (Due July 1st)
The U.S. Department of Transportation's Pipeline and Hazardous Material Safety Administration (PHMSA) requires hazardous material transporters to register and pay a fee in return for a certificate of operation. Members who have registration certificates that expire in 2008 must renew by July 1, 2008. This regulation applies to anyone that transports hazardous materials, including motor fuel, heating fuel and off-road diesel fuel dealers. If your vehicles are placarded, then you must comply. This requirement used to apply only to inter-state HAZMAT transporters, but in recent years was expanded to apply to all HAZMAT transporters. NEFI has published a members-only compliance kit on HAZMAT registration. A copy was sent to all members that registered their email address with NEFI. If you are a member and have not yet received a copy, or you are a non-member interested in receiving a copy, please contact Dave Huffman of NEFI at (617) 923-5022 or dave@nefi.com.

-TOP-

The Battle Against Speculation

• NEFI has joined the Air Transport Association and other groups in a letter to Congress calling for closing of market loopholes, full transparency across the board, and new margin requirements. READ THE LETTER

• The public seems to be "getting it." In recent Gallup polling, speculators were tied with Congress as the number one culprit in rising fuel prices, at 30 percent. This is up from 6 percent two weeks ago. Other: Consumers, 15 percent; OPEC, 4.5 percent; Big Oil, 3.4 percent.

• CFTC has announced an interagency task force to study the commodities markets. It will include the CFTC, the Federal Reserve, the Treasury, the SEC, the Department of Energy, and the Department of Agriculture. READ MORE

• According to Oil & Gas Journal, Sen. Byron Dorgan (D-ND) is opposing the nomination of Walt Lukken (R) as Chairman of the federal commodities trading watchdog, the CFTC. Dorgan urged Bush to withdraw the nomination (unlikely), citing Lukken's "inadequate" response to excessive speculation. Dorgan believes as much as 30 to 40 percent of crude is not justified by supply and demand. READ MORE

• In-line with Dorgan's position, Sens. Maria Cantwell (D-WA) and Bernie Sanders (I-VT) are blocking the Lukken nomination from consideration on the Senate floor. READ MORE

• U.S. Rep. Bark Stupak, Chair of the House Energy Oversight Subcommittee, says that he has uncovered oil trading manipulation, but at this point has not revealed details. More information is anticipated at his June 23 hearing. READ MORE

• OPEC has announced $160 billion to be invested in expanding oil capacity, which is expected to net an increase of 500 million bpd by 2012. READ MORE

Heating Fuels

• An NPR morning edition on high heating oil prices features Jamie Py from Maine Oil Dealers Association. LISTEN NOW

• The National Low Income Energy Consortium (www.nliec.org) is hosting a 2008 Energy Assistance Conference in Denver, Colorado next week (June 16-18). NEFI will be participating in the event and speaking at a forum on deliverable fuels.

Motor Fuels

• Some are reporting that the record increases in gasoline prices are affecting convenience store sales. READ MORE

• Spain and Portugal this week faced a major strike by truckers upset by sky-high diesel fuel costs. READ MORE

• Automaker GM has announced plans to close four truck and SUV plants and a likely phase-out or discontinuation of the "Hummer" line. GM says it will focus on smaller, fuel-efficient vehicles. READ MORE

If you have industry news items for a future issue of NEON, email jimcollura@nefi.com and put "NEON industry news" in the subject line. No more than 50 words please, "Read More" link optional.

-TOP-

• In Washington DC on Tuesday, Sean Cota, NEFI Board Member and immediate Past Chairman of the Board, represented the industry in the New CFTC Energy Market Advisory Committee. He was accompanied by James Collura, NEFI VP for Public Policy and Rob Underwood, PMAA Manager of Congressional Relations. (See lead story article)

• On Thursday June 12, representatives from NEFI and the Massachusetts Oilheat Council met with Senator Kerry's (D-MA) staff in Boston, Mass., to discuss the current challenges facing the heating oil industry. In attendance was Jim Collura, NEFI VP for Public Policy, Dave Huffman, NEFI Advocacy and Communications Specialist, Michael Ferrante, MOC President and Alisha Frazee, MOC Association Specialist. Special attention was given to the spike in oil prices and its impact on oil dealers, excessive speculation, LIHEAP margin-over-rack programs, and the need for relief of strained credit lines that dealers now face. Senator Kerry's staff was very receptive.

Learn How to Grow and Diversify Your Fuel Business in Challenging Times
Register Now to Attend Visions 2008

• The 2008 Visions Conference will be held at the Hilton Boston Logan Airport Hotel in Boston, MA on September 8-10, 2008. The program is taking shape and information and registration are available at www.visions2008.org. Tracy Goodwin, NEFI VP for Events, is pulling together the details. Craig Snyder of Wesson Inc., and Don Craft, industry consultant, have headed up the development of the new Visions event. View Visions headline presentations.




• 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 will go fast. Associate members and past exhibitors have first pick, so make sure to reserve your booth space now! For information and to reserve online go to www.nefi.com/expo.





• Sign up for NEFI's 2008 Fall Energy Conference to Napa Valley, September 23–28, 2008. The trip is doing extremely well and is sure to be a sell out. Act fast while space is still available. Please call Tracy Goodwin, NEFI VP & Dir. of Events at 617-923-5015 or email tracy@nefi.com if you are interested in joining NEFI and your industry colleagues on a trip to the beautiful wine country of northern California. For Details

Welcome New NEFI Members

Creative Printed Solutions
Tom Rich
PO Box 6660
Scarborough, ME 04070
Phone: 207-883-1577
Fax: 207-883-1580
Email: trich@cpsne.com
www.thecreativecompanies.com
Creative Printed Solutions provides statement/invoice processing and printing services.

Fuel Management Services, Inc.
Ed Kitchen
17321 Berkshire Dr.
Jeffersonton, VA 22724
Phone: 540-937-8226
Fax: 540-937-3454
Email: edkitchen@aol.com
Web: www.fuelmanagementservices.com
Fuel Management Services provides fuel additives.

Valiant Oil Co., Inc.
Rich Govoni
235 Weston St.
Waltham, MA 02453
Phone: 781-891-1000
Fax: 781-891-6000
Email: richfromvaliant@hotmail.com
Valiant Oil delivers No. 2 heating oil and provides heating and air-conditioning installation.

-TOP-




Sponsor This Newsletter!
NEFI would like to thank this month's NEON Sponsor, Beckett Corporation. For maximum exposure, your company logo and link should be on the front page of this newsletter next month. View sponsorship info and enrollment form. Call Tracy at 617-923-5015 or email tracy@nefi.com for more information.

-TOP-


NEFI Member Benefit Spotlight

View NEFI Membership Information

NEFI Members to Gain Access to *FREE* Seminars on SPCC Compliance
Soon to be announced, NEFI's Legislative & Regulatory Action Center will be holding an online seminar (or "webinar") on compliance with the new SPCC regulations, due July 1, 2009. The seminar will be held in late July 2008 (one year from the deadline) and will feature regulatory experts, a certified engineer and a NEFI member that has already complied with the rule. NEFI MEMBERS WILL BE ABLE TO ATTEND FOR FREE. Non-members wishing to attend the session will be subject to a fee, yet-to-be determined. For more information, contact Action Center director Jim Collura at (617) 924-1000 or jimcollura@nefi.com.

Join or renew membership with NEFI today! Click here, or contact Joanne Sharkey, NEFI Membership Coordinator at (617) 924-1000 or joanne@nefi.com.

-TOP-

NORA has recently been featured on BOBVILA.com for Intelligent Warmth and its benefits. The website explains the three major initiatives that NORA adheres to and the benefits of Oilheat. Vila discusses safety, efficiency, and environmentally friendliness that Oilheat provides.

-TOP-

Thank You NEFI Action Center Contributors:

Thank you to 2008 LRAC contributors to date.

Please support LRAC Center efforts by downloading and acting upon this pledge form or by contacting NEFI at (617) 924-1000.

-TOP-

---