The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding
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challenges remain. After a struggle that has already lasted eight or more years in general, with five years of focused effort how much more is left to do and how much energy is there in the industry to continue the fight? At this point, the struggle is focused on preventing a backslide on what has been accomplished; the push for the finalization of the position limits rule and increasing funding for the CFTC so that the current rules are enforced. "The fight now is on position lim- its," said Dan Gilligan, PMAA president. "Chairman Gensler has resigned, but he had proposed a rule to follow up and get position limits in place. Of course, Wall Street with their battery of lawyers effec- tively tied it up in the courts, so right before he left Gensler issued a new pro- posed rule which is far less vulnerable to attack. You lose time because you have this other rule that was moving forward, but we just felt that the legal battles were going to be too severe and draw it out even farther. We think is headed in the right direction now and we are working to continue to fight for effective posi- tion limits. "It's not perfect. And it's not having as much of an effect as we would want but we do think it is causing people to be more careful and more aware of some of the things that overheat the market with excessive speculation. I think we have elevated the understanding of a lot of people about how vulnerable the crude oil market is to undue influence if people hold too many contracts. I think it has done some good but it's hard to come up with statistics to specifically show that. But it is something we can see and believe in." Increasing CFTC funding is also a critical goal. "CFTC regulates 10 times what the SEC does, yet it essentially has no bud- get," Cota said. "With SEC, for every security it gets 50 cents and CFTC doesn't have any of that. It would take like 2 cents on a heating oil contract to fully fund the agency. What's 2 cents on a fuel oil contract? Will that make a dif- ference in whether or not a heating oil dealer would buy a contract? Probably not—that would practically be immea- surable. But the people who don't want to see CFTC do its job will tell you that will break the market and you can't do anything like that. That is one of the current battles that the industry needs to be engaged in." Unfortunately, the battle is one the heating oil industry has to lead. As Cota noted the heating oil market does a disproportionate amount of hedging for its products compared to other segments, including motor fuels. The trucking industry has a mechanism for passing along the costs with freight surcharges. The airlines, which have previously been a strong ally, have been impacted by mergers that have not paid off as well as expected. Publicly traded companies in impacted indus- tries have to fear negative influences behind the scenes with the same enti- ties that are handling their stocks. The major oil companies and a variety of intermediaries rely on repo agreements through these financial entities to sub- sidize product inventories (crude and refined) during shipment. Propane has tended to be less effected due to 22 June 2014 | FueL OIL neWS | www.fueloilnews.com FUELS Bart Chilton, a former industry champion at the CFTC