TREASURY SECRETARY WILL NOT USE BAILOUT TO BUY TROUBLED ASSETS
U.S. Treasury Secretary Henry Paulson has announced that he plans to use all $700 billion of the so-called "Wall Street Bailout Package" solely to inject capital into the lending industry in order to spur economic growth. The bill was passed by Congress in October in hopes that the Fed and the Treasury would use this funding to purchase bad mortgages and other assets from troubled banking institutions, but Paulson’s most recent announcement makes that unlikely. The Treasury has already injected hundreds of billions of dollars into the credit industry. But the credit market still hasn't thawed and the Secretary has received criticism over whether or not banks are using the Treasury-provided capital to lend money. NEFI and its allies share this concern and await a response to last week's letter requesting a meeting with the Secretary over credit issues within the heating oil industry. You can read the letter online here.

Several members of Congress, including Rep. Peter Welch (D-VT), Sen. Chris Dodd (D-CT) and Sen. Susan Collins (D-CT) have contacted the Secretary in support of a meeting with the heating oil industry. We will report to you as this story develops.

FTC HOLDS HEARING ON PROPOSED ENERGY MARKET MANIPULATION RULE
The Federal Trade Commission (FTC) held an all day hearing this week in Washington, D.C. on a proposed rulemaking designed to address energy market manipulation. The rule is mandated pursuant to The Energy Independence and Security Act of 2007 which gives the FTC new authority to root out fraud and manipulation in wholesale petroleum markets that many believe caused prices to soar at the pump this year. The rulemaking is important to petroleum marketers because it would not only create closer FTC oversight of upstream wholesale pricing practices but also give the commission broad powers to regulate energy futures trading. The rule is controversial because it would allow the FTC to usurp the regulatory jurisdiction of the Commodity Futures Trading Commission (CFTC) which many critics claim has failed to conduct any meaningful oversight of energy futures trading despite growing evidence of price manipulation.

Interested parties from the petroleum refining, distribution and marketing industries along with commodity futures traders participated in the hearing. Another key aspect of the proposed rule is the effort to define the scope of the petroleum "wholesale market" that the FTC seeks to regulate. The FTC is focusing its attention on market sectors located above the terminal rack. Each industry sector in the distribution chain told the FTC that the wholesale market line should be drawn at upstream distribution links. Most participants agreed that refiners and commodity traders should bear the brunt of FTC oversight since this is where wholesale prices are largely determined. Energy market traders told the FTC that they oppose any expansion of the Commission's power into an area where the CFTC already operates. Consumer advocacy groups urged the FTC to regulate broadly in order to prevent the kind of market manipulation that led to unprecedented price spikes in crude prices earlier this year. The FTC would not reveal much detail about the rulemaking other than to say that the rule would almost certainly include FTC energy futures trading oversight. PMAA Legal Counsel Bob Bassman and Regulatory Counsel Mark S. Morgan, Esq., were present at the meeting. The final rulemaking is due out by the end of the year according to the FTC.

BIOFUELS INDUSTRY SEEKS DELAY IN EPA RULE SETTING RENEWABLE FUEL MANDATE
This week a group representing biotechnology and renewable fuel industries asked the U.S. EPA to delay a final rulemaking that implements ambitious new annual renewable fuel quotas under the federal renewable fuel standard (RFS). The Energy Independence and Security Act requires the nation's fuel supply to include 9 billion gallons of renewable fuel in 2008 and 36 billion gallons in 2022. The law also requires that the EPA only count renewable fuels that provide a minimum 20% reduction in lifetime greenhouse gas emissions when compared with gasoline when calculating the annual quotas. EPA is drafting rules to enforce the act. The group of industries led by the Biotechnology Industry Organization (BIO) is concerned that the analysis used in the rulemaking process by the EPA of the indirect greenhouse gas emissions due to land-use changes from increased renewable fuel production would severely limit the future of the industry.

The analysis, conducted by the German Marshall Fund concludes that increased ethanol production will lead to greater demand for food crops, which will result in new land cleared for crop production, the destruction of which will result in greater carbon dioxide emissions. The group told the EPA that the analysis is not based on sound scientific evidence because there are no generally accepted methods for determining indirect land-use change in greenhouse gas emissions due to increased renewable fuel production. In addition, the group says the EPA's reliance on an analysis that concludes renewable fuels are responsible for increased greenhouse gas emissions could kill investment in the next generation of biofuels derived from cellulosic materials and would erode public confidence in ethanol and biodiesel in general. Environmental groups responding to the group's concerns said if additional time is needed to assess the effects of indirect land-use changes, EPA should refrain from certifying that any biofuel meets the life-cycle greenhouse gas reduction thresholds required in the 2007 energy bill. To do otherwise would be unlawful, say environmentalists. According to the EPA, the RFS rule is not complete and is not expected to be published any time soon.

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SBA SMALL BUSINESS LOANS DECLINE TO RECORD LOW; CONGRESS HOLDS HEARING
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. The U.S. Small Business Administration's (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 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.

The New England Fuel Institute offers members a free guidance document to help with understanding and applying for Small Business Administration loans. To obtain a copy, visit the Federal Regulations page of www.nefiactioncenter.com (members-only, password required) or contact Dave Huffman at 617-923-5022 or dave@nefi.com for assistance.

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NTSB SUPPORTS NEW LOADING/UNLOADING RULE
The National Transportation Safety Board (NTSB) this week called for a new DOT rulemaking that would regulate the loading and unloading of petroleum products from cargo tank vehicles. According to the NTSB, loading and unloading incidents accounted for 27% percent of all serious HAZMAT incidents between 2004 and 2006. Such incidents have been the result of inadequate inspection of equipment, inadequate measures to protect workers, and failure to monitor the process, NTSB said. The NTSB cited an incident where a truck driver delivering a load of gasoline to a service station tried to fill an already partially filled tank. Approximately 500 gallons of gasoline flowed in the street, starting a fire that killed five people. Last January, the U.S. DOT proposed recommended practices for the bulk loading and unloading of hazardous materials that included safety procedure analyses, emergency response practices, equipment maintenance schedules, and driver training. However, the NTSB said while these practices would help prevent incidents, they are voluntary and not enforceable. Instead, the U.S. DOT should consider rulemaking mandating the recommended practices, according to the NTSB.

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• NEFI SEEKS INFORMATION TECHNOLOGY (IT) SPECIALIST
We are currently seeking an individual with experience in maintaining servers, vendor IT infrastructure, Microsoft Exchange, and Linux based web applications. In addition to possessing the requisite knowledge, the right candidate will make the New England Fuel Institute's information systems their priority. As such, the ideal candidate should live locally (Watertown/Waltham, MA) or be available on very short notice (same day). Again, the ability to respond to the computing needs of NEFI in a timely manner is crucial. For more information, contact Shane Sweet, President & CEO at shane@nefi.com or 617-923-5011.

• Jim Collura, NEFI Vice President for Public Policy will attend an all-day seminar in Washington, DC on Friday, November 14, 2008. The seminar is hosted by Capitol Advantage and provides a legislative outlook and key issues to be tackled by the newly elected Congress and President.

• Collura also joined NEFI Vice Chairman of the Board Howard Peterson (Peterson Oil, Worcester, MA) and Alisha Frazee of Massachusetts Oilheat Council for a meeting with Global on lower sulfur heating oil and its future in the industry. NEFI and Global are planning a possible webinar and future industry-wide meetings to tackle the issue.

• The NEFI Government Affairs Committee (headed by Tom Devine of Devine Bioheat, Norwalk, CT) has rescheduled this week's conference call due to the Veterans Day Holiday. The call will be held on Thursday, November 20 at 3PM EST. For information contact jimcollura@nefi.com.


• The 2009 North American Heating and Energy Expo is scheduled for June 9-10, 2009 at the Hynes Convention Center, Boston. Fifty percent of booth spaces are sold 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.


See the Early-Bird Exhibitors for EXPO '09 Go Now

• View the latest edition of Oil & Energy online.

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.

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NEFI Member Benefit Spotlight

DELTA DENTAL INSURANCE PLANS AVAILABLE!
Rhode Island, Massachusetts, New Hampshire & Vermont
Group Rated Delta Dental Insurance Plans

New England Fuel Institute is pleased to offer members and their employees comprehensive dental plans at a very competitive monthly rate. Please visit www.nefiinsurance.com to review a detailed summary of benefits/rates for each NEFI Group Rated Delta Dental Plan Offer.

Please contact Donna Carcerano, Benefits Administrator at New England Fuel Institute (617) 923-5020 Direct Line, (617) 924-1000 ext. 220 or email donna@nefi.com

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The Department of Energy Updates Consumers
This has been a difficult year for energy with escalating prices affecting homeowners throughout America. Oil prices reached an all time high during the summer months and as the economy has slowed in the U.S., prices for crude have fallen. At this time, the price of oil is down to the levels we saw in 2005 and 2006.

The price of oil has dropped for 54 days and counting, reaching a low of $56 per barrel for crude and $1.83 a gallon for heating oil. The Department of Energy's "Winter Fuels Outlook" released in October indicated that heating oil prices would be higher than in 2007. However, since that time heating oil has fallen dramatically. Since that forecast, crude oil has fallen by one half. Under the current projection, The Department of Energy is forecasting a 17 percent reduction in heating costs from last winter. This dramatic decrease is based on $77 crude. However, the price as of Nov. 12 is $56, a further 27 percent decrease.

President of NORA, John Huber, noted, "We are very pleased that the prices have fallen. A price decrease is very welcoming to the heating oil industry and its customers, and the price decrease will make heating this winter much more affordable. Hopefully, these decreased costs will allow consumers to begin supporting the American economy again."

News Article Discrepancy Corrected
Below are links to two documents: the "Short Term Energy Outlook" report from the EIA and an article that H. Josef Herbert, writer for Associated Press, wrote and reported (Thursday, November 13) incorrectly regarding heating oil. Josef reported that "consumers are expected to pay $1,694 during this winters heating season, a 13 percent increase," however the EIA's chart clearly states that last year the average was $1,953 and this year heating oil is expected to be $1,694 a 13 percent decrease not increase! He went further to say that "residential fuel oil prices are expected to average $2.75 a gallon during the upcoming winter heating season, or 56 cents a gallon less than predicted a month ago, but still 17 percent higher than last winter." Again it should be 17 percent lower, last year prices were $3.31 and this year prices are expected to be $2.75, a 17 percent decrease not increase!" NORA worked quickly to have a correction issued and a revised news release was distributed within hours of the initial release. If you get questions from your local press, be advised that the story was initially reported incorrectly.

Oil Price Drop May Mean Lower Heating Costs, by H. Josef Hebert, Associated Press

EIA's "Short Term Energy Outlook" (go to page 8 of this report to see the chart)

For information on NORA please contact Traci Ross at tlross@nora-oilheat.org

See the latest NORA news at www.nora-oilheat.org.

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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.

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