US fuel dealers seek emergency heating oil release
(Updates with DOE comment, paragraph 8)
By Haitham Haddadin
NEW YORK, March 14 (Reuters) - U.S. heating oil distributors are planning to ask the government to release emergency heating oil supplies as part of a package to ease a cash crunch this winter, a source said Friday.
The squeeze for dealers has been caused by delayed payments from low-income customers and sky-high prices for their own fuel inventory and mirrors problems faced by the sector in 2004 when a run-up in prices pushed a top U.S. heating oil distributor to the brink of bankruptcy.
"It's brutal," said Shane Sweet, chief executive of New England Fuel Institute (NEFI), which represents some 1,000 distributors and retailers in northern states. He said customers occasionally ring their fuel dealers in tears over their heating bills.
"I was talking with heating oil dealers and gasoline station convenience store operators, and in terms of cost of fuel and the impact that it has to their operations, it's the worst year that most people can ever remember," Sweet said.
The average residential heating oil price paid by Americans surged to a record $3.68 per gallon this week, up more than 40 percent from a year ago, alongside a surge in the price of crude oil to all-time highs and a steep decline in Northeast stockpile levels, according to government data.
Several oil trade associations are in talks over the wording of a letter to be sent to the Energy Department by early next week asking for emergency supplies to be released, one source familiar with the plans told Reuters.
"We believe the Bush administration should release the reserve ... There are meetings going on right now working on the text of the letter," the source said.
An official at the Department of Energy said conditions for tapping the U.S. government's 2 million-barrel reserve have not been met despite soaring prices. Opening the reserve requires a determination from the White House and "is made available in the event of severe regional supply interruptions during extreme winter weather," the official said.
Supplies of heating oil in New England, the world's largest heating oil market, are nearly 25 percent below year-ago levels, according to government data.
"Right now, every option is on the table ... We're going to Washington because we need relief," NEFI's Sweet said. "The retail price is pushing $4 (a gallon) in some regions."
HELP FOR THE POOR
Fuel retailer associations including NEFI, the New York Oil Heating Association and the Petroleum Marketers Association of America are also considering sending a delegation to Congress to ask for an increase in funding for the Low Income Home Energy Assistance Program -- a program created in 1982 to help the poor pay for heat.
NEFI's Sweet said only about 5 percent of total heating oil consumers are covered under LIHEAP support.
"We are asking Congress to release additional funds through the LIHEAP program to aid those who are having a hard time paying their energy bills," said John Maniscalco, executive vice president of NYOHA.
The U.S. Senate late on Thursday voted to double funding for the LIHEAP program to $5.1 billion for the 2009 budget year which begins on Oct. 1, short of the immediate fix that the dealers were demanding.
The fuel dealer groups also want to talk to officials of the federal Small Business Administration about expedited loan programs to free up lines of credit for retail fuel marketers hit by higher costs to purchase the fuel from their wholesale suppliers.
"They are banging their heads against the ceiling in dealing with their banks and terminal operators," NEFI's Sweet said. "Just because fuel costs to dealers are twice what they were a year ago, that doesn't mean lines of credit get doubled."
In 2004, Connecticut-based Star Gas Partners LP (SGU.N: Quote, Profile, Research, Stock Buzz) told shareholders it was close to seeking bankruptcy protection amid a run-up in the price of heating oil. Star Gas's heating oil unit, Petro, is the nation's leading heat oil distributor. (Additional reporting by Robert Campbell, Rebekah Kebede, Robert Gibbons and Gene Ramos in New York, and by Tom Doggett in Washington; editing by Matthew Lewis)
By Haitham Haddadin
NEW YORK, March 14 (Reuters) - U.S. heating oil distributors are planning to ask the government to release emergency heating oil supplies as part of a package to ease a cash crunch this winter, a source said Friday.
The squeeze for dealers has been caused by delayed payments from low-income customers and sky-high prices for their own fuel inventory and mirrors problems faced by the sector in 2004 when a run-up in prices pushed a top U.S. heating oil distributor to the brink of bankruptcy.
"It's brutal," said Shane Sweet, chief executive of New England Fuel Institute (NEFI), which represents some 1,000 distributors and retailers in northern states. He said customers occasionally ring their fuel dealers in tears over their heating bills.
"I was talking with heating oil dealers and gasoline station convenience store operators, and in terms of cost of fuel and the impact that it has to their operations, it's the worst year that most people can ever remember," Sweet said.
The average residential heating oil price paid by Americans surged to a record $3.68 per gallon this week, up more than 40 percent from a year ago, alongside a surge in the price of crude oil to all-time highs and a steep decline in Northeast stockpile levels, according to government data.
Several oil trade associations are in talks over the wording of a letter to be sent to the Energy Department by early next week asking for emergency supplies to be released, one source familiar with the plans told Reuters.
"We believe the Bush administration should release the reserve ... There are meetings going on right now working on the text of the letter," the source said.
An official at the Department of Energy said conditions for tapping the U.S. government's 2 million-barrel reserve have not been met despite soaring prices. Opening the reserve requires a determination from the White House and "is made available in the event of severe regional supply interruptions during extreme winter weather," the official said.
Supplies of heating oil in New England, the world's largest heating oil market, are nearly 25 percent below year-ago levels, according to government data.
"Right now, every option is on the table ... We're going to Washington because we need relief," NEFI's Sweet said. "The retail price is pushing $4 (a gallon) in some regions."
HELP FOR THE POOR
Fuel retailer associations including NEFI, the New York Oil Heating Association and the Petroleum Marketers Association of America are also considering sending a delegation to Congress to ask for an increase in funding for the Low Income Home Energy Assistance Program -- a program created in 1982 to help the poor pay for heat.
NEFI's Sweet said only about 5 percent of total heating oil consumers are covered under LIHEAP support.
"We are asking Congress to release additional funds through the LIHEAP program to aid those who are having a hard time paying their energy bills," said John Maniscalco, executive vice president of NYOHA.
The U.S. Senate late on Thursday voted to double funding for the LIHEAP program to $5.1 billion for the 2009 budget year which begins on Oct. 1, short of the immediate fix that the dealers were demanding.
The fuel dealer groups also want to talk to officials of the federal Small Business Administration about expedited loan programs to free up lines of credit for retail fuel marketers hit by higher costs to purchase the fuel from their wholesale suppliers.
"They are banging their heads against the ceiling in dealing with their banks and terminal operators," NEFI's Sweet said. "Just because fuel costs to dealers are twice what they were a year ago, that doesn't mean lines of credit get doubled."
In 2004, Connecticut-based Star Gas Partners LP (SGU.N: Quote, Profile, Research, Stock Buzz) told shareholders it was close to seeking bankruptcy protection amid a run-up in the price of heating oil. Star Gas's heating oil unit, Petro, is the nation's leading heat oil distributor. (Additional reporting by Robert Campbell, Rebekah Kebede, Robert Gibbons and Gene Ramos in New York, and by Tom Doggett in Washington; editing by Matthew Lewis)
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