By John MacKenna
Michael Estes, owner of Estes Oil & Propane, in York, ME, is the new Chairman of the New England Fuel Institute (NEFI). After serving two years as First Vice Chairman, he succeeds Sharon Peterson, of Apple Oil, as the organization’s Chairman and President. Estes joined his family’s fuel business in 1987 after working for 17 years at Watts Regulator Co., where he started as a night shift machine operator and rose to Production Control Manager.
The 17-year career in manufacturing was an important hiatus for Estes, who was not enamored with the Oilheat industry when he got his first taste of working with his father on weekends and vacations. “I absolutely hated it,” he said of his introduction to the industry, and he was happy to get out on his own and do something new. When his parents approached him in 1987 about taking over, however, his point of view had shifted, and he was ready. He had developed a love for business and was able to apply what he had learned to grow and diversify the family business and get involved in industry leadership.
He knew nothing about NEFI at the time, because Maine was not a member, but he was active in the Maine Oil Dealers Association (MODA). He worked hard for the organization and soon earned the titles of Education Chairman and Chairman of the Board. He also started to get involved with NEFI after Sean Cota and James Townsend visited MODA to promote NEFI’s activities. The more he learned, the more he realized that the heating oil industry needed a strong lobbying presence in Washington, D.C., to protect its interests. “I could see the need for us to have not only a state voice but a national voice, because there are a lot of people out there who don’t support our product,” he told Oil & Energy in an exclusive interview after last month’s NEFI VISIONS Conference. “We need to stay focused and be a strong voice in Washington and take our agenda and push it forward.”
Here is Oil & Energy’s conversation with Estes.
Oil & Energy: What do you see as some of NEFI’s proudest accomplishments of recent years?
Michael Estes: All our associations and most of our companies after 2008 had to look at their structures and right-size them so we could continue to do the work that we do. We were bloated, and we needed to modernize. With the help of a lot of people, we really did that here at NEFI. Over the past six years, one of our main objectives was to become a lobbying organization focused on national issues for the heating oil industry and put boots on the ground in Washington. With Michael Trunzo, Jim Collura and Mark Morgan, we have a very dynamic team, and our voices are starting to be heard. I think our biggest accomplishment is the progress NEFI has made with the strategic plan. We can now become more practical and push a heating oil agenda that will help not only New England but all the Oilheat states in the Northeast.
The other thing we have done very well is reaching out to different groups outside our industry like ISO-New England. The way that power plants were changing from nuclear, oil and coal to natural gas was leaving us in a difficult state, because when it got very cold some of them were switching to our fuel to run their plants, and it would spike our prices to the point where consumers were really taking it on the chin. We were able to work with ISO-New England and come out with contingency plans so that in winter the plants had a certain amount of fuel in storage, and they would not have to drain all the diesel and heating oil from the market. That really helped to stabilize prices.
We have also had productive partnerships with the states working to slow the expansion of natural gas lines and oppose the state governments’ attempts to help the utilities and pipeline companies by letting the utilities charge ratepayers for the pipeline costs. It has been a state-by-state issue, but NEFI has been able to work with states very collaboratively. We have worked with the attorneys general and given testimony and even worked with groups like the Sierra Club and the Conservation Law Foundation. Although they are still against fossil fuels, they really like what we bring to the table with Bioheat®.
O&E: Has NEFI found a good formula for cooperation and support?
ME: As part of the strategic plan, we have become a very good partner to the states. A lot of work has been done to bring change to areas where we were competing with states for the same reduced memberships. As my good friend Matt Cota has said, they want NEFI to be the wholesaler and the states to be the retailers. We are no longer competing with the states on education. We need to support the states so that they can continue to do that. Companies everywhere are facing a big shortage of drivers, technicians and even office help, and NEFI needs to help in whatever ways we can to promote their interests.
O&E: With the onset of more favorable pricing and the advantages that biodiesel blending offers, how does the future look for the heating oil industry?
ME: Because of horizontal drilling in the U.S., people are optimistic that oil will stay in the $40 to $60 range. That means we can have mid-$2.00 heating oil for years to come. With all our states committed to go to ultra low sulfur heating oil on July 1, 2018, that will allow us to bring in higher efficiency condensing equipment because the fuels will be cleaner, and you won’t have the problem with sulfur building up on heat exchangers. This will allow us to compete better with gas, and with the Bioheat piece, we need to get everyone on board with a minimum of B5 in the product and move up to B20, because that will take away one of natural gas’s advantages. With the cleaner fuel and the more efficient equipment, I think heating oil’s future is very strong. Five years ago there was a big push to get off oil, but now customers are saying that maybe they should just update the oil and keep it, because it is a very affordable fuel. Things were very different when oil was at $4 and natural gas was at $1.20. Now our prices seem to be in a position of stability, and a lot of things are happening on the natural gas side such as increased exports. I think they are creating opportunities for themselves that will take away the glut of natural gas. I don’t see that big disparity in prices coming back any time soon.
O&E: How can NEFI protect the heating oil industry and the companies that sell heating oil from unfavorable regulations from EPA, DOT, DOE and other federal agencies?
ME: We have to have boots on the ground in Washington, which we do, and we may need to expand on that, as things get more intense. For some reason, there are agencies that have their eyes dead set on us, such as DOT continually trying to push burdensome regulations on our drivers. If we don’t push back, eventually there will be nobody available to drive. We are supporting legislation to see if we can get Class B drivers reclassified so they are not treated like long haulers. Our industry doesn’t have issues with drivers falling asleep at the wheel.
We all grew up in an industry where our fathers had us driving an oil truck to help, but now you can’t drive until you’re 21. We want to be able to hire drivers who are not interested in going to college and give them a good paying job right out of high school. If you talk to anyone in this industry they will tell you they don’t have enough drivers, and now we are dealing with this sleep apnea thing where if you’re overweight or you have a 17-inch neck you’ve got to go into testing. And they want additional training, so you’re no longer able to take an employee out on a truck and train them when your company is diversifying. Instead, they have to go to school for it. We’re not absolutely opposed to these things, but this is what is happening every year. Now it’s placarding, and before that is was wet lines regulations. These are all philosophical rules that they put in that have no science or studies to support them. It is a constant battle, and the only way to know what’s coming through is to have people on the ground in Washington.
O&E: How can NEFI interact most effectively with the other New England state associations?
ME: We have done a lot of work with the New England states on biofuel, and I think we need to start pushing at the state level for Bioheat mandates. We have a great opportunity where PMAA is really trying to freeze the [Renewable Fuels Standard] for ethanol at 10 percent. It is a chance for us to increase the EPA biodiesel mandates and increase the amount of bio that is going into heating oil. We have a huge market that could take all the bio and push it through heating systems. Look at the advantages: You can do it without people changing their heating systems, and you are instantly using cleaner fuel that protects the atmosphere. It is probably the quickest way to get the cleanest environment and the easiest way to do it without any state or federal subsidies.
Another issue that we are very much engaged in is LIHEAP funding. We really think the federal government should streamline and keep more money with the recipients. They should not be tampering with what fuel the consumers should choose. We also would rather not allow the federal government or the states to say how you discount the fuel. There is nobody with a bigger heart than heating oil dealers. We want to help people and have them stay warm, but LIHEAP customers are high-cost customers, and we don’t think the states or the federal government should dictate how we use the money. LIHEAP customers should be paying the same as regular customers.
There is also the big issue that we all work together on, which is the reauthorization of NORA. And we can also go to work on the Jones Act, which is an antiquated law that was good for its time in 1920 but needs to be modernized. With all the pipelines and all the fuel going into the Gulf Coast market and all the infrastructure that’s there, it is ridiculous that we can export these energy products outside the U.S., but we can’t bring them to Philadelphia.
O&E: Isn’t the Jones Act untouchable?
ME: You are probably going to have to take on some of the unions to do that, but the union people don’t want to see good paying jobs go overseas. There has to be some understanding we can reach in order to put these changes through. This is for the betterment of America. Helping reduce energy prices by decreasing domestic transportation costs will put a lot of money in people’s pockets so they can spend it helping themselves and the economy. We should be doing everything in our power to keep energy prices low.
O&E: What is NEFI doing to increase its cooperation with industry associations beyond the six New England states?
ME: If our industry is going to have a voice in Washington, it needs to be a bigger voice than just the New England states. We need to get New York, New Jersey, Pennsylvania, Delaware and all the eastern and NORA states coordinating and speaking with one voice, and NEFI can lead that charge along with PMAA.
O&E: Are there any particular areas of emphasis that you have in mind as you begin your term as chairman?
ME: The key thing we need to do is to engage more Oilheat dealers in the mix. Right now under the current dues structure NEFI is a volunteer program, so we are not reaching all the people in the states. Even if they are not members, we need to reach out to them with communications so that we are all talking from the same page and all have the same message on biofuel and why we need 18-year-olds to be able to drive, and so forth. If we don’t go in united at the state and federal level, they tend not to listen. But if we come in united, we will be able to make a difference. I think communication will be the key piece going forward.