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Additional Material Submitted for the Record
Statement of the
Petroleum Marketers Association of America
Subcommittee on Energy Research and Development
Committee on Energy and Natural Resources
Conservation R&D Program for Home Heating Oil
March 17, 1986
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
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
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.
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.
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.