PMAA's Weekly Review - August 22,  2008  (WR-08-33]

 

PMAA PLATINUM PARTNER:

Platinum National Partner

FederatedInsurance.Com

 

 

 

In This Issue:

 

NEW CFTC DATA ON SPECULATION RAISES CONCERNS FOR OIL COMMODITY MARKETS

 

PMAA OUTLINES FUTURES MARKET CONCERNS ON CNBC

 

HOUSE SPEAKER MAY ALLOW VOTE ON OFF-SHORE DRILLING

 

LEGISLATION WOULD INCREASE BIOFUEL DISPENSING INFRASTRUCTURE TAX CREDIT TO $100,000

 

MAINE SENATOR INTRODUCES AN ENERGY ASSISTANCE BILL FOR STRUGGLING HOMEOWNERS

TWO NEW BILLS TO ADDRESS SKYROCKETING HOME ENERGY PRICES


PMAA PARTNER SPOTLIGHT FEATURING: GILBARCO INC.

 

FINAL REMINDER TO MAKE YOUR HOTEL RESERVATIONS FOR PMAA’s FALL MEETING OCTOBER 3-4

 

PMAA MEMBER SERVICES SPOTLIGHT FEATURING: LABORCHEX

 

ETHANOL BLEND SUPPLIERS SHOULD MARK SHIPPING PAPERS TO AVOID LIABILITY

 

NEW ALASKAN DRILLING LEASES

 

MARKET MANIPULATION RULE

 

FROM THE U.S. ENERGY INFORMATION ADMINISTRATION

 

 

 
 

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PMAA encourages you to donate to the
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Visit us at:

WWW.PMAA.ORG


Telephone:
703-351-8000

Petroleum Marketers Association of America

(PMAA)

1901 North Fort Myer Drive

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Arlington, Virginia 22209

NEW CFTC DATA ON SPECULATION RAISES CONCERNS FOR OIL COMMODITY MARKETS

The recent Commodity Futures Trading Commission (CFTC) data reclassification of speculative positions in oil markets has raised some serious concerns for oil commodity markets. The CFTC learned that one energy commodity trading firm, which had been registered as a commercial entity because the firm executed trades primarily for industrial firms that needed oil to run their businesses, was actually taking speculative positions on behalf of itself. At one point, the firm’s portfolio held 11 percent of the open interest for crude oil contracts on the regulated New York Mercantile Exchange (NYMEX). The newly reported data has raised concerns for several lawmakers including Congressman John Dingell (D-MI) who stated, “It is now evident that speculators in the energy futures markets play a much larger role than previously thought, and it is now even harder to accept the agency’s laughable assertion that excessive speculation has not contributed to rising energy prices.”

According to CFTC data this firm, which the CFTC has not released its name, was one of the most active traders on NYMEX which acquired a huge holding in oil contracts speculating that oil prices would rise. The contracts were equal to 57.7 million barrels of oil which is almost three days worth of U.S. oil consumption. The recent CFTC reclassification has added fuel to the fire that speculation is playing a much larger role in oil commodity markets than previously thought.

On September 15, 2008, the CFTC will provide a detailed report to Congress on whether speculation in commodity markets is driving prices to unprecedented levels. PMAA hopes the CFTC report will not be biased towards Wall Street investors and instead provide a fair and accurate assessment of energy commodity speculation.

On Thursday, PMAA sent another letter to members of Congress urging them to pass much needed legislation aimed at curbing excessive speculation in the oil commodity markets. Please view the Senate version and House version of the letter to Congress.

PMAA OUTLINES FUTURES MARKET CONCERNS ON CNBC

Last Friday afternoon PMAA President Dan Gilligan appeared live on the CNBC Streets Signs show to discuss PMAA concerns with excessive speculation in energy markets. He stressed the importance of Congress providing the CFTC the tools to create a reliable transparent futures market with aggregate position limits on non-physical traders. CNBC Host Melissa Lee was especially focused on recent admissions by NYMEX that the speculative influence in energy markets was greater than previously reported.

Responding to the NYMEX story, Dan pointed out that the NYMEX numbers are only a portion of the market. PMAA is alarmed that the CFTC has no way of knowing the extent of speculative influence in the Over-The-Counter (OTC) markets.

Video is now available at this website.

HOUSE SPEAKER MAY ALLOW VOTE ON OFF-SHORE DRILLING

Speaker Nancy Pelosi (D-CA) announced recently that she may allow a vote on off-shore drilling which would grant Republicans and some Democrats their wish, the legislation would also include a number of provisions such as repealing up to $30 billion in tax breaks for oil companies, the creation of a federal renewable portfolio standard, releasing oil from the strategic petroleum reserve, and a provision aimed at tackling excessive speculation in the oil markets.

On Monday, House Republicans said that they would refuse to consider any energy bill that came straight to the floor from Democratic leadership’s offices. Republicans want any energy bill to go through committee markups which can be a lengthy process.

Congress is still in August recess and will return the second week in September for three weeks. Please urge your members of Congress to pass the speculation bill: S. 3268 and H.R. 6604 without delay!

LEGISLATION WOULD INCREASE BIOFUEL DISPENSING INFRASTRUCTURE TAX CREDIT TO $100,000

Reps. Herseth Sandlin (D-SD) and John Shimkus (R-IL) introduced bipartisan legislation that would increase the Alternative Fuel Vehicle Refueling Property credit which allows gas station owners to claim a 30 percent tax credit for the cost of installing clean-fuel vehicle refueling properties up to a maximum of $30,000.

The E85 and Biodiesel Access Act would raise the amount of the credit from 30 percent of the cost of qualifying property to 50 percent up to a maximum of $100,000, and allows station owners to claim the value for the entire cost of dual purpose fuel dispensers (currently the IRS limits the credit to the amount a dual purpose fuel dispenser exceeds the cost of equivalent conventional refueling dispensers).

H.R. 6734 does not yet have a Senate companion bill, but the E85 and Biodiesel Access Act is likely to be rolled into a larger energy package next year. PMAA supports passage of this legislation.

MAINE SENATOR INTRODUCES AN ENERGY ASSISTANCE BILL FOR STRUGGLING HOMEOWNERS

Senator Susan Collins (R-ME) introduced the Energy Assistance Act of 2008 (S. 3349) legislation that would provide an additional $1.8 billion for FY 2009 in funding to low-income families for weatherization programs, grant dollars for low-income families who do not qualify for energy efficiency tax credits, low interest loans for middle-income consumers, and an extension of tax incentives for renewable energy programs. Specifically, S. 3349 would establish an “Energy Assistance Revolving Fund” that will make low-interest loans to individuals and small businesses for energy efficiency improvements. Individuals who make less than 115 percent of the median area income would be able to apply for low-interest loans to cover the difference between the tax credits available for energy efficiency improvements and up to 90 percent of the cost of those improvements. The federal agencies would provide these loans directly or through their lender networks. The low interest loans would also be available to businesses to purchase and install any qualified alternative fuel vehicle refueling property.

TWO NEW BILLS TO ADDRESS SKYROCKETING HOME ENERGY PRICES

Before Congress adjourned for August recess, three Connecticut representatives introduced two pieces of legislation aimed at assisting families and small businesses with high energy costs. Rep. Christopher Shays (R-CT) introduced the Home Heating Oil Assistance Act of 2008 (H.R. 6784) which will provide a refundable credit against income tax to help struggling families heat their homes this winter. H.R. 6784 would provide a refundable tax credit of up to $500 or 33 percent of an individuals’ residential home heating costs. The amount would be reduced by five percent of an individual’s adjusted gross income if it exceeds $200,300 for a joint return; $182,400 for a head of household; $164,550 for an unmarried individual; and $100,150 for the taxable year when a married taxpayer files a separate return.

The same day Rep. Shays introduced his piece of legislation, Representatives Joe Courtney (D-CT) and Christopher Murphy (D-CT) introduced another energy tax relief bill, H.R. 6804, which would provide a temporary refundable credit of 50 percent of the individual’s annual residential energy costs up to $750 for individuals and $1,500 for joint return for either the 2008 or 2009 tax year. For taxpayers with adjusted gross income over $75,000 or $150,000 for a joint return, the credit would be reduced. Small businesses with gross receipts of up to $20 million without regard to the $5 million limit in the Internal Revenue Code Section 448(c) would be allowed a temporary credit for the 2008 and 2009 tax years to offset high fuel costs which would equal 15 percent of the amount paid during the taxable year for fuel used for business needs. Also, H.R. 6804 would make permanent the credit for non-business energy property and would amend Section 25C(b)(3) to increase to $1,500 the credit for qualified oil furnaces. With heating oil season around the corner, Congress needs to pass legislation to help those who need it most.  

PMAA PARTNER SPOTLIGHT FEATURING: GILBARCO INC.

REGISTER NOW: September 10th Webinar on PCI & Payment Security

Gilbarco, Inc. is pleased to offer their first FREE webinar as a PMAA National Partner! The Payment Security Solutions topic will be presented at 1:00pm EST on Wednesday, September 10th.

Please see Gilbarco’s flyer on the webinar and register today. Should you have additional questions, please contact your local Gilbarco distributor.

FINAL REMINDER TO MAKE YOUR HOTEL RESERVATIONS FOR PMAA’s FALL MEETING OCTOBER 3-4

PMAA will hold its Fall Meeting in conjunction with the NACS Show on October 3-4 at the Hilton Chicago. Please delete your browsing history prior to viewing PMAA’s Housing link.  NACS Housing Customer Care Center can be reached at 1.800.448.6227 Monday through Friday from 9am to 9pm Eastern Standard Time. Housing registration closes August 29, 2008; however, PMAA will release the remainder of our rooms to NACS for the general public at 9:00AM EST Tuesday, August 26th! 

Please view the Conference Schedule and register for PMAA’s Fall Meeting.  The NACS Show registration is separate from the PMAA Meeting Registration and early bird registration closes August 15th!

PMAA MEMBER SERVICES SPOTLIGHT FEATURING: LABORCHEX

A Cover Sheet For Your Job Application

Instead of handing someone a simple job application that is generic in nature, we suggest that clients add a cover sheet on top. When you go this extra step, you are letting the applicant know that you appreciate his/her desire to work for you, but in order to keep the workforce, your customers and the community safe, you conduct background checks. This serves as a ‘warning’ to the applicants that, if considered for employment, they will be checked out.

Once an applicant reads this, he/she might just get up and leave for fear of having negative details revealed, such as a damaging criminal record. After all, think of all the time your business has wasted in the past just accepting job applications from people who should not have walked in your door to begin with. LABORCHEX can offer you a free sample cover sheet that you can customize in any way you like.

LABORCHEX provides employment background screening services to PMAA members nationwide at discounted pricing. For more information, review PMAA’s program or contact Steven J. Austin at 800.880.0366 or at suastin@laborchex.com.

ETHANOL BLEND SUPPLIERS SHOULD MARK SHIPPING PAPERS TO AVOID LIABILITY

The U.S. EPA issued a letter several weeks ago to gasoline retailers warning that it is illegal to sell ethanol blends above E-10 for use in gasoline-only vehicles and engines. The EPA went on to explain that ethanol blends up to E-85 may be sold for use in flexible-fuel vehicles and engines. According to the EPA, the illegal sale of blends over E-10 to consumers with gasoline-only vehicles and engines exposes retailers, and possibly their suppliers, to significant civil penalties under the Clean Air Act.

The EPA letter recommended dispenser label warnings and other measures for blends over E-10 to prevent retailer liability for misfueling. However, the agency was silent on steps suppliers should take to prevent liability for misfueling that occurs on the retail level (liability is based on introducing an unregistered fuel into trade or commerce). A supplier may potentially be held liable for misfueling if the supplier knew or should have known that ethanol blends delivered to the retail site were being used to fuel gasoline-only vehicles and engines.

While it is not a federal requirement, PMAA is recommending to suppliers who wish to avoid potential liability for misfueling to place the following warning on all product transfer documents for ethanol blends over E-10 delivered to retail facilities: “Not for Use in Gasoline-only Vehicles and Engines.” Also, as a reminder, the U.S. DOT HAZMAT shipping paper entry requirements for ethanol blends recently changed. The following shipping entries must be used (followed by the quantity of fuel):

 
Blends Shipping Paper Entry Under New Rule
Gasoline up to 10%
ethanol content.
Gasohol, 3, NA1203, PG II
Gasoline, 3, UN1203, PG II
Over E-10 up to E-85 Ethanol and Gasoline Mixture, 3, UN3475, PG II
Alcohol up to 5% Alcohols, n.o.s., 3, UN1987, PG II
Gasoline Denatured Alcohol, 3, NA1987, PG II
Ethanol and Gasoline
Mixture, 3, UN3475, PG II

NEW ALASKAN DRILLING LEASES

The Bureau of Land Management has announced the opening of more than 4.8 million acres in Alaska’s National Petroleum Reserve for oil and gas exploration. The lease sale is the fifth offered in the 23 million acre reserve since 1999 and will include land that had previously been offered for leasing in the past. Currently, about three million acres of the petroleum reserve is under lease. Exploration drilling has occurred over recent years, but there has not yet been any commercial production. The Interior Department estimates that the entire petroleum reserve holds potential for 10 billion barrels of recoverable oil and 70 trillion cubic feet of natural gas.

MARKET MANIPULATION RULE

The Federal Trade Commission (FTC) issued a proposed rule last week that would prohibit market manipulation in the petroleum industry. The commission was given authority to promulgate regulations prohibiting market manipulation in wholesale petroleum markets under the Energy Independence and Security Act enacted in December 2007.

The rulemaking process began on May 1 with an Advanced Notice of Proposed Rulemaking that drew over 150 comments from interested parties. FTC's proposed rule would make it unlawful for any person to use or employ any device, scheme, or artifice to defraud; to make any untrue statement of a material fact or to omit a material fact necessary in order to make a statement not misleading; or to engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon any person.

PMAA is examining the proposed rule closely and will file comments with the FTC.

FROM THE U.S. ENERGY INFORMATION ADMINISTRATION

U.S. Average Retail Gasoline Price - The U.S. average retail price for regular gasoline fell for the fifth consecutive week sliding another 7.1 cents to hit 380.9 cents per gallon, a cumulative loss of 30.5 cents from the all-time high of July 7. Falling more than any other region, the price on the East Coast plunged 8.9 cents to 379.9 cents per gallon. The smallest drop of any region – 4.1 cents – was in the Midwest where the price slipped to 373.1 cents per gallon. Dropping 8.1 cents to 368.5 cents per gallon, the Gulf Coast price remained the lowest regional price. The price in the Rocky Mountain region fell 5.3 cents to 395.3 cents per gallon. The West Coast price dropped 8.3 cents to 405.7 cents per gallon, a cumulative plunge of 40.3 cents from the all-time high in the region set on June 23. The average price in California retreated another 8.7 cents to 411.8 cpg.

U.S. Average Retail Price for Diesel Fuel - Average U.S. retail diesel prices continued their downward trek for a fourth week tumbling another 14.9 cents to 435.3 cents per gallon. Despite losing more than 41 cents since hitting the all-time high on July 14, the average U.S. price was still 150.6 cents higher than last year at this time. The average price on the East Coast fell 14.3 cents to 442 cents per gallon. The price in the Midwest remained the lowest of any region plunging 15.2 cents to 426.7 cents per gallon. The average price in the Gulf Coast dropped 15.1 cents to 429.9 cents per gallon. Once again, the price drop in the Rocky Mountains was the smallest for any region tumbling 13.2 cents to 447.3 cents per gallon. Receding another 15.3 cents, the West Coast price hit 451.1 cents per gallon down nearly 40 cents from the record set July 14. In California, the average price plummeted 17.4 cents to 460.7 cents per gallon.

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