Half-cent-per-gallon rack fee is designed to protect , grow industry for future generations . By Sean Cota , NEFI , and Thomas J . Tubman , AEC

Since 2000 , economic and political forces have driven some 3.5 million homes to convert from heating oil to other fuels , primarily natural gas and electricity .

State heating oil associations in the Northeast are on the front lines in the battle for the industry ’ s survival . Every day , they fight to stop policymakers from legislating or regulating heating oil dealers out of business . They fight fossil fuel bans and carbon taxes . They fight state-sponsored programs that subsidize electric and gas heating installations yet demonize heating oil equipment . They work tirelessly to show policymakers and consumers that the heating oil industry has a better , faster , more affordable and reliable path to net-zero emissions with renewable liquid heating fuel .

But with the market shrinking at an accelerating rate , these state associations are drastically under-funded , especially compared to the utilities and environmental organizations that are waging an all-out war on heating oil .

The American Energy Coalition ( AEC ) has proven a powerful ally to heating oil dealers and associations in the Northeast , contributing hundreds of thousands of dollars per year to the fight , but it too has seen funding diminish significantly over the past five years . Dealers also pay two-tenths of a cent at the rack to fund the National Oilheat Research Alliance ( NORA ), which provides crucial support for technical training , research and development , and equipment rebates . However , NORA money cannot fund state associations ’ daily operations , competitive advertising , or lobbying efforts – the very things that industry leaders say they need most for this fight .

To close this critical funding gap , NEFI has proposed the creation of an Industry Survival Fund through a voluntary opt-out program . The program would work like this :

• Dealers in participating states would be charged half a cent per gallon at the rack

• On 4 billion gallons sold , this fee would generate $ 20 million for the industry

• 70 percent of funds raised would go to participating state associations

• States ’ allocations would be based on NORA allocation percentages

• Funds received by participating states would be totally unrestricted ; each state association would decide how to use the money it receives

• The remaining 30 percent of funds raised would go to NEFI and AEC

• Participation by wholesalers and dealers would be fully voluntary as each would be able to opt out of the program

• Participating wholesalers would opt in by signing an agreement and would qualify for an administrative fee for facilitating the program

• The program would begin as soon as Q3 2021 and end in Q4 2024

• An Independent Oversight Committee comprised of representatives from the participating wholesalers , state association executive boards , NEFI , and AEC would review funding use annually

NEFI ’ s use of its share of the Industry Survival Fund would depend on how many states and companies end up participating . If there is a substantial degree of participation , NEFI would spend 43 percent of its funding on marketing , 38 percent on legal costs , 14 percent on advocacy and 5 percent on administrative expenses . With minimal participation , the association would devote 40 percent of its funding to legal costs , 25 percent to marketing , 20 percent to advocacy and 15 percent to administrative expenses .

Likewise , each participating state would be able to determine independently how to budget its new funding stream . This way ,

states facing different threats could adapt to the particular situation at hand and respond accordingly with the appropriate resources .

The plan was presented on May 20 , 2021 , at a meeting of over 100 state association executives and board members . Presentation speakers included NEFI President and CEO Sean Cota , NEFI Chairman Ed Scott , Vermont Fuel Dealers Association Executive Director Matt Cota , former NORA Chairman Charlie Uglietto , Massachusetts Energy Marketers Association President Michael Ferrante , Connecticut Energy Marketers Association President Chris Herb and Energy Marketers Association of Rhode Island Executive Director Diane Quesnelle .

State association board members in attendance were asked to take the information they received during the presentation back to their respective boards so that each could hold a vote on whether they will participate in the program , and to get back to NEFI with their decision by July 1 , 2021 .

That decision could very well determine the ultimate fate of the liquid heating fuel industry in the Northeast . l FON

Sean Cota is the president and chief executive officer of the National Energy & Fuels Institute . He can be reached at sean . cota @ nefi . com .

Thomas J . Tubman is the executive director of the American Energy Coalition , which promotes the benefits of oil heat in comparison to other energy sources , particularly natural gas .

22 JULY / AUGUST 2021 | FUEL OIL NEWS | www . fueloilnews . com