Heating Oil Issues

The Heating Oil industry has long been a crucial part of the nation’s fuel delivery system, supplying approximately 11 million households with heating oil. This industry is predominant in the Northeast, the Midwest, and the Pacific Northwest; thus, these areas are where most of the heating consumption occurs. As we enter the new era of energy pricing and challenges, it is incumbent upon Congress to recognize the unique attributes of oilheat and provide appropriate support for the industry and those who use oil for fuel.

Oilheat has many advantages as a domestic energy supply. First, it is easily transportable, so consumers are able to benefit from an international oil market and are able to be supplied with oil from all international supply points when demand is very high. Normally, the industry relies on domestic production for its supplies, but if there are problems or demand increases, the international sources are available. Second, oilheat is consumed at the home or business; thus there are no product losses to transmission similar to those that occur in electricity distribution. Third, oilheat when consumed at the consumer level, is very clean burning and the equipment is very efficient.

PMAA urges the Congress to do the following.

1. Increase funding for oilheat research and development in the Department of Energy’s research budget. This program is currently funded at $500,000 and provides basic research to lower energy consumption and improve emissions. The program has been very successful and consumers are using technology that is developed there to improve the reliability of their equipment and lower fuel consumption. PMAA supports funding this program at $1,500,000. If the government funds the program at this level, the oilheat industry will contribute $300,000 from voluntary assessments.

    

2. Institute a more attractive depreciation schedule for oilheat storage. Currently the Internal Revenue Service authorizes oilheat storage tanks to be depreciated at either 5 years or 15 years. Considering the crucial role that oilheat plays, and the crucial role of inventories in having stable prices, PMAA urges Congress to adopt legislation to allow oilheat storage to be expensed in the year they are put into service.

    

3. PMAA is concerned with several bills that would give special tax credits to consumers for using specific types of equipment. PMAA believes that the Congress should not specify particular types of equipment that are eligible for tax credits. PMAA is particularly concerned that some legislation would subsidize the installation of heat pumps, even though they will consume more energy than oilheat equipment. Such subsidies will lead to increased consumption of fuel in the United States, more pollution, and will exacerbate our energy problems. PMAA encourages the Congress to provide subsidies on a fuel neutral basis.

 

PMAA Staff Contact(s):

Laura Tague, Director of Regulatory Affairs

Sarah Dodge, Director of Legislative Affairs