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APPENDIX II

Additional Material Submitted for the Record

PMAA

Statement of the

Petroleum Marketers Association of America

Before the

Subcommittee on Energy Research and Development

Committee on Energy and Natural Resources

U.S. Senate

Advocating a

Conservation R&D Program for Home Heating Oil

March 17, 1986
(329)

MEMBERS OF THE PETROLEUM MARKETERS ASSOCIATION OF AMERICA

The Petroleum Marketers Association of America represents the independent petroleum marketers who are members of these state and regional trade associations:

Alabama Dilmen's Association
Arizona Petroleum Marketers Association
Arkansas Oil Marketers Association, Inc.
California Independent Oil Marketers Association
Colorado Petroleum Marketers Association
Independent Connecticut Petroleum Association
Florida Petroleum Marketers Association
Georgia Oilmen's Association
Idaho Oil Marketers Association
Illinois Petroleum Marketers Association
Indiana Oil Marketers Association, Inc.
Petroleum Marketers of Iowa
Kansas Oil Marketers Association
Kentucky Petroleum Marketers Association
Louisiana Oil Marketers Association
Michigan Petroleum Association
Mid-Atlantic Petroleum Distributors Association, Inc.
Mississippi Petroleum Marketers Association
Missouri Oil Jobbers Association
Montana Chapter, Western Petroleum Marketers Association
Nebraska Petroleum Marketers, Inc.
Independent Oilmen's Association of New England
Fuel Merchants Association of New Jersey
New Mexico Petroleum Marketers Association
Empire State Petroleum Association
North Carolina Petroleum Marketers Association
Northwest Petroleum Association
Ohio Petroleum Marketers Association
Oklahoma Oil Marketers Association
Oregon Petroleum Marketers Association
Pennsylvania Petroleum Association, Inc.
South Carolina Oil Jobbers Association
South Dakota Petroleum Marketers Association
Tennessee Oil Marketers Association
Texas Oil Marketers Association
Virginia Petroleum Jobbers Association
Washington Petroleum Marketers Association
Western Petroleum Marketers Association
West Virginia Petroleum Marketers Association
Oil Jobbers of Wisconsin, Inc.
Wyoming Petroleum Marketers Association

The Petroleum Marketers Association of America is located at 1120 Vermont Avenue, N.W., Suite 1130, Washington, D.C. 20005. Telephone (202) 331-1198.

Statement of the
Petroleum Marketers Association of America

Before the
Subcommittee on Energy Research and Development
Committee on Energy and Natural Resources

U.S. Senate

Advocating a
Conservation R&D Program for Home Heating Oil

PMAA very much appreciates the opportunity to describe its concern over the proposed lack of funding for oil heat R&D in the Department of Energy's budget request for Fiscal Year 1987.

PMAA is a national federation of 41 state and regional trade associations representing 11,000 independent marketers of petroleum products, equipment and service. While almost all of these marketers are small businessmen, collectively they sell over three quarters of the home heating oil and half of the gasoline consumed in America today.

Example of R&D Benefits for consumers

PMAA believes that federal research has been very beneficial to consumers of oil heat. For example, the oil heat program that was started in 1978 at Brookhaven National Laboratory is one of the most successful stories in federal research history. With an R&D investment of only $5 million, Brookhaven demonstrated the success of the flame retention burner that has become the industry standard for new oil heating equipment.

New flame retention equipment and retrofit devices for existing oil burning equipment are estimated to save consumers $1.5 billion through reduced oil usage by the end of the next decade. This amounts to one of the best cost/benefit ratios ever funded by DOE.

Proposed Oil Heat R&D

PMAA feels that there are several research projects that should be undertaken by DOE in FY87 that are equally as promising in terms of costs and benefits to 15 million oil heat taxpayers as the example just cited. These projects have been identified in a study being funded by DOE through Batelle Pacific Northwest Laboratories.

Attached to this statement is a detailed description and proposed funding level for these projects, which are summarized on the fourth and last page of this statement. Briefly, a total funding level of $1.9 million is required in three areas of activity:

First, $1.05 million for efficiency advances on equipment such as heat exchangers and venting systems

Second, $650,000 for advanced combustion and control, including pulsed combustion oil heating equipment

Finally, $200,000 for technology transfer programs.

Oil Heat Slice of the Budget Pie

PMAA is aware of the Gramm-Rudman limitations on the budget, and supports efforts to reduce the deficit by reductions in federal spending. However, the pie chart on page 3 of DOE'S Budget Highlights reveals Total Budget Resources of $19 Billion for DOE in F987.

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The pie chart shows that the $.2 billion budget category of "Grants and Other" is barely visible as a 1% slice of the total budget pie, and that is over 100 times larger than PMAA'S $1.9 million request for oil heat. This raises the question why taxpayer dollars are supporting DOE's multi-billion projects to produce electricity and natural gas from nuclear energy and coal, without any effort toward helping taxpayers as a user of oil heat.

Federal Role is Needed

The federal R&D for other fuels augments the work of the Gas Research Institute and the Electric Power Research Institute, which are funded by: hundreds of millions of dollars in surcharges on electric and natural gas rates that are approved by federal and state authorities.

By contrast, local oil heat marketers have no exclusive sales territories and no government approval or means to impose R&D surcharges. Major oil companies, which produce and refine oil products, do not accept responsibility for any R&D activities on behalf of equipment manufacturers or any end users, including space conditioning, automobiles or airplanes.

Most manufacturers of oil heat equipment also make gas and/or electric appliances. With a relatively smaller sales potential in oil, it is understandable that equipment manufacturers commit their limited resources to the gas and electric equipment that is the focus of the government and utility research efforts.

Considering the Administration's policy calling for a balanced and mixed energy picture, Congressional support for this request would encourage an effort by DOE to develop a coordinated equipment R&D program for oil heat.

Budget Limitations

PMAA recognizes the budget limitations which are prevalent throughout the government, and PMAA supports efforts to reduce the deficit by reductions in federal spending. However, if DOE is going to continue any R&D programs at all, then it is only fair to the 18% of American taxpayers who heat with oil that oil heat get its tiny slice of the R&D budget pie. PMAA strongly urges the support of this Subcommittee for a necessary portion of DOE'S total budget to continue an oil heat program with such an excellent and beneficial track record.

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