State is planning for fuel shortage

An energy task force is set up to deal with any price spikes, supply problems or other emergencies.

By TUX TURKEL, Staff Writer
November 17, 2007

Record-high oil prices and a desire to be prepared for potential
fuel shortages this winter are prompting the state government
to develop an energy emergency management plan.

Gov. John Baldacci said Friday that he is setting up an energy
task force to help coordinate state resources. Fuel shortages or
price spikes during the heating season could lead Baldacci to
declare energy emergencies and take steps needed to protect
public welfare, such as opening shelters and monitoring price
gouging.

In summarizing his plan, Baldacci sought a balance between
promising action and recognizing state government's limited
ability to influence global markets. "While there are a number of
things we can do, we cannot solve our country's dependence on
foreign oil ourselves," he said.

A propane shortage last winter, caused largely by a railroad
strike in Canada, caught Maine off guard and forced dealers to
ration deliveries. That led Baldacci to ask members of his
administration, including John Kerry, the state's energy director,
to meet this summer with oil dealers, terminal operators and
other officials who could play key roles during a fuel emergency.
Kerry will lead the new task force.

The state is making other efforts to ease the burden of high fuel
prices this winter. Among them:

n The Public Utilities Commission is releasing an additional
$400,000 for weatherization and efficiency measures for low-
income homeowners.

n The Keep ME Warm program is providing kits that include
efficient light bulbs, weatherstripping and window insulation
through Community Action Programs.

n Every Friday for six weeks, starting with the Friday after
Thanksgiving, residents will be able to ride many local bus lines
for free. The goal is to encourage greater use of mass transit.

n An unspecified number of gas stations will begin selling fuel
blended with 10 percent ethanol. Ethanol is available in
Massachusetts and southern New Hampshire. State taxes aside,
the fuel's wholesale price is now 11 cents a gallon cheaper than
that of the winter gasoline sold in Maine, according to the Maine
Oil Dealers Association.

Baldacci also asked Maine's congressional delegation to keep
pushing for increased federal funding from the Low-Income
Home Energy Assistance Program.

In a related development, Sen. Olympia Snowe, R-Maine, said
Friday that she had asked the federal Office of Management and
Budget to immediately release $20 million that remains in
emergency funds.

Last year, the LIHEAP program gave more than 46,000
households an average benefit of $588. The need is greater
now, and legislative leaders said this week that it's likely the
state will have to supplement the federal money.

But state government can't do much to get at the core of the
energy crunch in Maine: high heating oil prices. The statewide
average price for heating oil hit $3.11 a gallon last week, 92
cents higher than at the same time last year. Kerosene rose to
$3.51.

Eight of every 10 Mainers heat their homes with oil or kerosene.
They consume roughly 427 million gallons a year, according to
the latest information compiled by the state energy office. By
comparison, propane, natural gas, wood and electricity each
accounted for less than 6 percent of the state's home heating
fuel in 2003, the most recent year for which data are available.

"Most of the problem with high prices is something we can't
adjust," said Jamie Py, executive director of the 250-member oil
dealers group.

Dealers are dreading a winter in which many customers will have
trouble paying their bills and filling their tanks, Py said. Dealers
already offer payment plans and expect to lose money in
hardship cases.

"But there's only so far they can go and stay in business," he
said.

State laws and rules give consumers and oil dealers specific
rights regarding delivery and prices.

In the face of a potential supply shortage, the governor can
declare an "abnormal market disruption." That makes price
gouging illegal. He also can act during a spike in prices.

Dealers also have protections. They can, under certain
circumstances, charge extra for unscheduled deliveries, as long
as they divulge the amount and the reason. They also can charge
a $5 penalty when an order doesn't fill at least 50 percent of the
tank or 100 gallons, whichever is less.

In preparing for an energy emergency, officials are trying to get
a better understanding of the state's petroleum supply chain and
to maintain communication with suppliers. Those contacts
proved critical last year, when officials realized that as much as
70 percent of Maine's propane supply came by rail from Canada.
Communication is especially important for keeping tabs on
heating oil delivery, which is vulnerable to weather and shipping
disruptions.

A major terminal operator who met with Kerry said his company
fills its oil tanks before winter and tops them off as demand
dictates.

Andy Lynch, a spokesman for Sprague Energy, said the
company's terminal in South Portland can hold 46 million
gallons of heating oil and kerosene, and 40,000 gallons of pure
biofuel, which is blended for bioheat.

A typical barge shipment of heating oil is between 4 million and
9 million gallons. For competitive reasons, Lynch declined to say
how many days' supply the terminal keeps in storage. He said
the facility is well-supplied.

"We are more than willing to work with the government in any
way," he said.

Kerry said such partnerships will be critical in an emergency, and
in helping the government anticipate possible problems. "We're
trying to do everything in our power to make sure no one goes
without heat," he said.

Staff Writer Tux Turkel can be contacted at 791-6462 or at:

tturkel@pressherald.com

Copyright © 2007 Blethen Maine Newspapers