Thursday, October 7, 2010

House Fails To Adopt Low Sulfur Heating Oil Standard To Save Consumers $86 Million/Year

The House this week failed to adopt a Clean Heat Initiative to require ultra low sulfur standard to provide clean-burning heating oil, but moved Senate Bill 901 (Scranati-R-Jefferson) that was the intended vehicle.
The House did amend the bill to include new taxes on thousands of gas stations and convenience stores to fund enforcement of the biofuels program and ignored the bigger issue of requiring clean-burning heating oil with biofuels content.
John Kulik, vice president of the Pennsylvania Petroleum Marketers and Convenience Store Association, said amendments to Senate Bill 901 that were passed during a last-minute flurry of legislation debated before the House adjourned for its election recess impose new burdens on small businesses and the customers they serve. The amendments would add another new fee, or tax, on companies that sell diesel fuel in Pennsylvania. Each outlet would pay an additional $100 tax, on top of myriad other local, state and federal fees and taxes.
"This tax, which is imposed on distributors and retailers who are required by the state to sell this kind of fuel, adds more costs to handling the fuel,” said Kulik. "While some might argue that $100 does not seem like much, for businesses that have multiple locations the tax can accumulate to thousands or tens of thousands of dollars. It’s a tax that they and their customers will be forced to pay."
An amendment to the bill supported by PA Petroleum Marketers and Convenience Store Association, American Lung Association, Clean Air Council and the biofuels industry in Pennsylvania, would have put in place a clean heat plan to reduce the sulfur content in home heating oil in Pennsylvania from as high as 5,000 parts per million (ppm) to 15 ppm and require a 5 percent biodiesel blend in the fuel that 1.2 million Pennsylvania households rely upon to stay warm each winter.
This change would save Pennsylvania heating oil users $86 million a year (14 cents a gallon) by lowering the sulfur content of heating oil and reduce maintenance costs for customers using the cleaner-burning fuel.
The proposed requirements mirror current national standards for on-road diesel, which is exactly the same product as home heating oil. And, the plan would bring Pennsylvania in line with New York, the largest market for heating oil in the United States, and New Jersey, which this year adopted plans to meet the new standard.
Heating oil and diesel fuel are in the fact the same product and refiners have been making ultra low sulfur diesel fuel to meet the federal requirements since 2009. Sunoco, a Pennsylvania-based oil refiner in Marcus Hook, now makes nothing but ultra low sulfur heating oil and diesel fuel for its customers.
The use of ultra low sulfur fuel will also help the state meet federal mandates of limiting PM .5 particulate standards and reduces the state's carbon foot print compared to the existing fuel.
“The House chose to ignore this far-reaching proposal and passed the tax increase instead," Kulik said. "We’re disappointed that the such an important amendment was rammed through the House as the legislative session is winding down. Our association will oppose passage of Senate Bill 901 in the event the House takes up the measure on final passage.”
The House is expected to take a final vote on Senate Bill 901 the next time they are in voting session. The House is not scheduled to be in after the election in the lame duck session. The Senate is expected to adjourn for the year on October 14 and Senate Republican Leadership has repeatedly said they will not return after the election in the lame duck session to vote on any legislation.
For more information, visit the PA Clean Heat Initiative webpage.