Adapting to the New Fuel Specifications

Heating oil wholesalers and marketers are beginning to navigate the hodgepodge of heating oil fuel specifications that have developed as individual states move to reduce the sulfur content in the fuel.

Between New York State and the six New England states, there are three different specifications for heating oil as of July 1. New York Sate has the strictest standard, limiting sulfur to 15 parts per million (ppm), That standard has been in effect since July 2012.

A second standard – 500ppm – took effect July 1 in Connecticut, Massachusetts, Rhode Island and Vermont. Those states will continue their transition in 2018, when they move to the same 15ppm sulfur standard as New York.

The third standard in effect, in Maine and New Hampshire, is for traditional, higher-sulfur fuel. Maine now limits sulfur content at 3,000ppm to 5,000ppm, while New Hampshire imposes a 4,000ppm limit.

With multiple specifications in play, suppliers who serve more than one state are forced to make choices. Do they store and deliver two different kinds of heating oil, or do they stock just one and hope for the best?

The issue is getting some media coverage. Check out articles covering the transitions in Vermont and Connecticut.

The specification hodgepodge is sure to be an important issue for marketers for the balance of 2014, and Oil & Energy will explore it in detail, starting with our August issue. We’re reporting on a presentation by petroleum wholesalers at the NEFI Visions Conference, and Dan Lothrop of Hedge Solutions will examine the likely price differences between fuel types in the monthly Market Stance column. Please look for those in early August, both in print and on Oil & Energy Online.

Preliminary word is that wholesalers will be offering supplies to meet every state specification. To stay abreast of the issue, please follow us on Twitter (@OilEnergyOnline) and subscribe to the print edition.

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