NEON: NEFI Energy Online News

NEFI AND ALLIES MEET WITH TREASURY OFFICIALS OVER CREDIT CRISIS
On Wednesday, November 19, the New England Fuel Institute, joined by industry allies, met with Phil Swagel, Assistant Secretary for Economic Policy and Jeb Mason, Deputy Assistant Secretary for Business Affairs and Public Liaison of the U.S. Treasury Department in Washington, D.C., to discuss the unfolding credit crisis and its effect on heating fuel dealers nationwide. The industry representatives outlined the problems and possible solutions in a memorandum.

The group educated the Treasury officials on what appeared to be a failure of the "bailout" money being injected in to Wall Street of having any real impact on Main Street heating fuel dealers and their consumers. They argued that banks are using funds from the Troubled Assets Relief Program (TARP) to make acquisitions that benefit shareholders, not to provide loans to small businesses, which was the program's intent. And those small businesses, including heating fuel dealers, are in urgent need of capital and credit in order to make it through the winter.

As heating fuel dealers themselves, Sean Cota, Ed Miller, Jim Meehan and Chris Keyser (complete list of meeting attendees below) were able to put a face on the problem, and able to describe in detail the challenges facing the industry--especially the "blanket disqualification" that some industry dealers are receiving from banks, despite apparent credit worthiness.

Several possible solutions were discussed during the meeting, each of which requires further data collection and deliberation. This is a developing situation that we will continue to report on in future issues of NEON.

The meeting included: NEFI President & CEO Shane Sweet; NEFI Chairman of the Board Chris Keyser of Owner Services (Proctor, VT), PMAA President Dan Gilligan; Fuel Merchants Association of New Jersey President Ed Miller and Executive Vice President Eric DeGesero; Independent Connecticut Petroleum Association Executive Director Gene Guilford and ICPA Chairman Jim Meehan; Oil Heat Institute of Rhode Island Executive Director Julie Gill; Vermont Fuel Dealers Association Executive Director Matt Cota; and Sean Cota of Cota & Cota (Bellows Falls, VT).

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

The 110th Congress is currently in session addressing the unfolding economic crisis and other priority issues. The newly-elected 111th Congress will take office on January 3rd.

INTERNATIONAL LEADERS VOW GREATER FINANCIAL SERVICES REGULATION
Members of an expanded group of 20 representatives from industrialized or pseudo-industrialized nations came together last weekend to discuss the economic crisis and what to do about it. The group, referred to as the "G-20," vowed to act to bring about greater transparency and scrutiny of the global financial markets. The group set out five principals for action that would reverse the causes of the crisis, which include opaque and unregulated markets and products:

Strengthening Transparency and Accountability
Enhancing Sound Regulation
Promoting Integrity in Financial Markets
Reinforcing International Cooperation
Reforming International Financing Institutions

The agreement drafted by the G-20 laid out both immediate- and medium-term actions, and the group plans on meeting again by April 1, 2008. View the full document Declaration of the Summit on Financial Markets and the World Economy.

With support from NEFI, the Petroleum Marketers Association of America (PMAA) sent a letter asking U.S. representatives to engage the international community in support of greater transparency and oversight of futures trading.

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NEFI HOSTS ENERGY TRADING OVERSIGHT COALITION MEETING
On Thursday, November 13, at 3PM EST, NEFI hosted a conference call with members of the Energy Market Oversight Coalition, a group that involves well over 200 national, regional and state organizations, representing everything from trade associations, industrial manufacturers, agricultural interests, airlines and truckers, public power and utilities, low income and consumer advocates and faith based groups all committed to one cause--full transparency and accountability on all commodity trades and platforms. All on the call agreed that excessive speculation and abusive trading practices on opaque markets was a major force driving commodity prices within the last several years. The group assembled an immediate-term list of actions to be taken, including calling on President-elect Barack Obama and the new Congress to act on this issue within its first 100 days in order to prevent a run-up in commodity prices like was experienced since the implementation of the disastrous Commodity Futures Modernization Act of 2000 and the subsequent creation of a wide range of trading loopholes and deregulation. More information to come.

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REPUBLICANS LOSE ALASKA AND LIEBERMAN; SENATE DEMS NOW AT 58
Convicted Sen. Ted Stevens (R-AK) learned on Tuesday (on his 85th birthday, in fact) that he had been defeated by Democratic Challenger Mark Begich by 3,724 votes. Stevens bid farewell to his Senate colleagues on the Senate floor today. His departure and defeat, and the agreement by Senator Lieberman (I-CT) to stay with the Democrats, now leaves the party within two seats of the 60 vote "filibuster-proof" Senate majority. The two remaining undecided Senate races in Minnesota and Georgia will determine if they get there. In Minnesota, Republican Sen. Norm Coleman and Democratic challenger Al Franken are locked in a recount battle and the outcome of that race may ultimately be decided in court. In Georgia, Republican Sen. Saxby Chambliss is headed for a Dec. 2nd runoff election against Democrat Jim Martin. Political celebrities and special interest groups are turning out at the stump for the candidates, including Sen. John McCain (R-AZ) and NRA advocate Wayne LaPierre, while former White House duo Bill Clinton and Al Gore have stumped for Martin.

The other hot scene of political action is the U.S. Congress, where battles over committee leadership on energy have been contentious. In the House, Rep. John Dingell (D-MI), of Detroit, an auto industry advocate, has apparently been routed by Rep. Henry Waxman (D-CA) for the chairmanship of the House Energy and Commerce Committee. The development signals a potentially more progressive shift on energy policy within the committee, as Dingell has typically a conservative voice on energy policy. Sen. Joe Lieberman (I-CT), who was scorned by Democrats for support of Republican Presidential candidate Sen. John McCain, will keep his chairmanship of Homeland Security and will caucus with the Democrats in the majority, but will lose chairmanship of a climate change-related subcommittee in the Environment & Public Works Committee.

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HERE IS YOUR CHANCE TO CONTRIBUTE TO THE 'INDUSTRY'S CAUSE'
Wondering how you can contribute to the great work done by the New England Fuel Institute, its Legislative & Regulatory Action Center, Government Affairs Committee and various coalitions, partnerships and alliances? With the new Congress, new President and possibly the most ambitious legislative and regulatory agenda in history on the horizon, your help is needed now more than ever! Please consider a contribution--even a small contribution of $100 or $300--to the NEFI Action Center Fund. Simply visit www.nefiactioncenter.com (NO log-in or password required) and click "Make a Donation," which is in bold red font in the menu on the left side of the screen. When the "Contribution/Pledge Form" page opens, simply fill out the desired donation amount, billing information and contact information fields and click "submit contribution." Donors can either choose to be billed for their donation or may use a credit card (we accept Visa, MasterCard and American Express). Remember that our pledge forms list suggested donations only. Thank you!

Click here to view the 2008 LRAC contributors to date.

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

NEW FEDERAL RULE MAY REQUIRE SOME DRIVERS TO WEAR HIGH VISIBILITY VESTS
The Federal Highway Administration (FHWA) is set to implement a new rule next week that requires workers within federal-aid highway right-of-ways to wear high visibility apparel. The lack of clarity in this rule raises doubt whether the requirement applies to petroleum truck drivers making deliveries in those areas. The rulemaking was finalized by the FHWA in 2006 as mandated by Congress under the Safe, Accountable, Flexible, Efficient Transportation Equity Act of 2005. Under the FHWA rule, any worker walking within the right-of-way of a federal aid highway must wear high visibility safety apparel--specifically, ANSI Class 2 reflective vests. The rule was written to protect emergency responders, highway maintenance employees and construction workers from vehicular traffic while working within the right of way of federally funded highways.

However, recent statements by the FHWA on the scope of the rule and preliminary enforcement actions on the state level raises concerns that the rule also applies to petroleum drivers that deliver product, such as heating oil or propane, while parked in the right-of-way of a federal aid highway. The FHWA recently said the rule applied to any worker within the right-of-way of a federal aid highway. However, this interpretation is clearly at odds with the more restrictive language adopted under the final rule that clearly exempts delivery truck drivers from compliance. The scope of the rule is made murkier since it only applies to workers on "federal aid highways" which are defined as "highways on the Federal-aid highway systems and all other public roads not classified as local roads or rural minor collectors." Complicating matters further are reports from several states that drivers delivering heating oil from trucks parked on a public road where recently "warned" by law enforcement that they must wear reflective vests. The FHWA rule will take effect on Nov. 24, 2008. NEFI Regulatory Counsel Mark S. Morgan, Esq., is working with the FHWA in order to clear up, as quickly as possible, the applicability issue as it relates to petroleum drivers.

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SMALL BUSINESS ADMINISTRATION TRIES TO FREE ADDITIONAL FUNDING FOR LOANS
The U.S. Small Business Administration announced it has revised two regulations to help small businesses gain access to capital. New SBA loans will now be able to be made using the one-month London interbank Offered Rate, or LIBOR, in addition to the prime rate. By allowing both rates, SBA hopes to make its lending programs more flexible and increase opportunities to access capital. The second regulatory change will allow a new structure for SBA loan pools sold on the secondary market. The new structure should affect profitability and liquidity in the secondary market, encourage lenders to make SBA-backed loans, and free up frozen capital for small businesses. Read the full press release. NEFI Regulatory Counsel Mark S. Morgan, Esq., will analyze these rulemakings and the potential help it might afford small business fuel dealers looking for additional capital through the SBA. A reminder to NEFI members, a Guidance Document on SBA loans is available at www.nefiactioncenter.com under "Federal Regulations" (login required) or by contacting Dave Huffman at (617) 923-5022 or dave@nefi.com.

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MEANWHILE, CONGRESSIONAL HEARING SHOWS SBA LENDING DOWN IN 2008
Capital for small businesses is becoming less available and more expensive because of the economic downturn, according to testimony at a U.S. House Small Business Committee hearing held on October 28, 2008. The U.S. Small Business Administration (SBA) loan programs typically increase lending during an economic downturn to serve as an alternative source of credit when lending has tightened in the conventional markets, according to a report released by the committee at the hearing. But in fiscal year 2008, SBA's flagship loan program experienced the largest decrease in volume of loans and funds in the history of the program. SBA's 7(a) program experienced a 38% decline in program volume from the previous year, and total funds loaned declined by $1.64 billion or 11%, according to the report. The 504-loan program experienced similar declines, with project financing and total dollars falling over 16% compared with 2007.

The committee report attributed the decrease in lending to the zero subsidy policy implemented by the Bush administration in 2002 that prevents SBA from contributing funds to reduce borrower and lender fees on program loans. Increased borrower and lender fees hinder the free flow of capital to small businesses and lending in the program will ebb and flow in accordance with the prevailing market forces which are not favorable to small businesses seeking credit in the current economic environment, according to the report. Witnesses told the Committee that lenders are frustrated with the loan guarantee process, while borrowers are turned off by excessive loan fees, complicated forms and information requirements necessary to qualify for an SBA loan. Witnesses urged Congress to enact changes to the SBA's lending programs to reduce fees, simplify the application process, and increase maximum loan guarantees amounts, in order to make the loans more attractive to lenders and borrowers alike.

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General News

CHICAGO & DUBAI TEAM UP ON OIL TRADING – The Chicago Mercantile Exchange (CME) and the Dubai Mercantile Exchange (DME) are teaming up to offer energy and commodity futures trading on the same platform, starting first quarter 2009.
REPORT CITES 'SMOKING GUN' ON COMMODITY SPECULATION – A recent post on the commodity speculation blog "The Accidental Hunt Brothers" has claimed the "Smoking Gun" that the commodity price run-up experienced earlier this year was the result of speculative forces.
FED AGENCIES SIGN CREDIT DEFAULT SWAP MOU – Three major U.S. regulators, the Federal Reserve, Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) signed an agreement cooperate in oversight of credit-default swaps and clearing houses. CFTC Commissioner Chilton dissented from the agreement, citing concerns it is "sending the message that other regulatory bodies have the same or similar levels of expertise [as the CFTC] in this area," which he argues is not the case.
OFFSHORE DRILLING IN VIRGINIA – The U.S. Minerals Management Service has taken the first step needed for conducting an oil drilling lease sale in off-shore Virginia (Lease Sale 220), proposed for 2011. It would open federal (not state) waters for oil exploration and recovery. The President lifted executive-branch prohibitions and Congress did not renew the ban on offshore drilling, allowing for leasing of certain offshore areas.

Heating Fuels

VT PUBLIC RADIO COVERS INDUSTRY CREDIT ISSUES – and interviews Matt Cota of the Vermont Fuel Dealers Association, who explains why industry leaders went to Washington to meet with Treasury officials this week. You can listen to the piece here.
OP-ED: LETS DO WHAT IS RIGHT FOR OIL DEALERS – Excellent opinion piece appeared in The Valley Breeze on "doing what is right" concerning oil dealer contracts.
BLOOMBERG TAKES ON HEATING OIL TRUCK COMPLIANCE – New York City Mayor Bloomberg has unveiled a new set of stricter standards and inspections for heating oil trucks.
FIRST 'NATURAL GAS OPEC' MEETINGS SET – The Russian-led "Forum of Gas Exporting Countries"--called by some the "Natural Gas OPEC"--is set for its first meeting to draft a charter on Nov. 26, 2008, and a Moscow summit on Dec. 23, 2008. The group's founding members will include Russia and likely Iran and Qatar, which together control half the world's natural gas reserves.
ALASKAN NATURAL GAS PIPELINE IN JEOPARDY – According to Alaskan officials, a $30 billion natural gas pipeline supported by former-Republican Vice Presidential candidate Gov. Sarah Palin may be in jeopardy due to lack of funds.

Motor Fuels

2009 RENEWABLE FUEL REQUIREMENT SET AT 10.21 PERCENT – The EPA has set its 2009 renewable fuel requirement for most refiners, importers and non-oxygenated blenders of gasoline at 10.21 percent for 2008 to ensure that at least 11.1 billion gallons of renewable fuel will be blended into transportation gasoline, up from 7.76 in 2008.
EPA CONSIDERS E-15 or E-20 TO MEET RFS – The U.S. EPA last week reiterated its belief that a move to E-15 or E-20 is still a viable option in order to meet volume requirements under the Renewable Fuels Standard (RFS), which requires 36 billion gallons of ethanol or other renewable fuels by 2022. The EPA is currently studying concerns that blending higher than E-10 will damage emissions systems and cause significant corrosion in petroleum storage and dispensing equipment.
ETHANOL INDUSTRY ASKS CONGRESS TO HELP DETROIT – The Ethanol Industry has asked the federal government to act quickly to help ailing American auto makers, obviously seeing the future of American flex fuel cars in jeopardy.
LOWER GAS PRICES FAIL TO SPUR SPENDING – Despite falling prices at the pump, recent data shows retail woes still worsen.
KEY SENATOR SAYS FEDERAL GAS TAX HIKE UNLIKELY – Sen. Jeff Bingaman has told Reuters that he believes that an increase to the current 18.4 cpg gas tax is unlikely.

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• ENERGY COMMUNICATIONS COUNCIL (ECC) SPEAKS UP FOR INDUSTRY
At this year's Winter Fuels Outlook conference, the ECC (of which NEFI is a member) defended the industry in the presence of reporters from various media and policymakers. The ECC, which represents Long Island, New York City, New Jersey, Virginia and New England not only actively participated, but shaped the discussion. Kevin Rooney, of the Oil Heat Institute of Long Island, vigorously questioned a natural gas representative. Frank Gallagher of Woodbury & Morse (a public relations firm) also was in attendance on behalf of the ECC. He contacted EIA officials to draw attention to regional differences like the cost of electricity. As a result of their combined efforts, the EIA acting director Howard Gruenspecht mentioned regional differences. Also of importance, media coverage included the fact that the increase of energy costs was not just in heating oil but fuel in general.

• COCARD LAUNCHES NEW 'FALL INTO SAVINGS' PROGRAM AND SWEEPSTAKES!
COCARD launches the new Fall Into Savings Program and Sweepstakes. Oilheat and propane dealers can save up to 40% on their credit card processing fees and get a chance to win an exclusive 5-day VIP package to the 2009 Arnold Palmer Invitational in Orlando, Florida, compliments of MasterCard. "We recognize that oil heat and propane dealers are facing some very daunting cash flow challenges this winter" said Tracy Richmond, V.P. of COCARD. "We want the dealers to know there is an IMMEDIATE way to start keeping more of the money they earn and reduce their credit card processing expenses by up to 40%."

COCARD is utilizes its extensive knowledge of the programs available to the energy industry to GUARANTEE savings no matter which company currently does the dealers' processing. It is the country's recognized expert in the MasterCard Utility Industry Program, which offers an interchange rate for qualifying one-time and recurring U.S. consumer credit MasterCard card, World MasterCard^® card and Debit MasterCard^® card transactions. "COCARD has been very active with NEFI over the last five years to enhance and improve the benefits the Oilheat and propane industry receive from credit cards," Richmond stated.

In addition to saving money immediately, any dealer which signs up for the MasterCard Utility Industry Program and runs their first transaction with COCARD before December 31, 2008 will get a chance to win an exclusive five-day VIP package to the 2009 Arnold Palmer Invitational in Orlando, Florida. The package, courtesy of MasterCard, includes travel, accommodations, VIP hospitality and the chance to cross the barrier ropes and walk in the fairway as the world's best golfers compete.

For more information please call COCARD at (866) 849-8800 or visit www.fallintosavings.com

• NEFI LAUNCHES MEMBER DIRECTORY PROJECT
NEFI is undertaking a new initiative, namely a membership directory that will prove its value as a 24/7/365 reference tool for membership and all associate companies and service providers. In the sixty years since NEFI was established, a resource directory of this nature has long been asked for. Advertising is being made available in economical "block" formats. The directory will contain listing information for every member and associate member company. For more information, link here.