ICPA, 10 Alcap Ridge, Cromwell, Connecticut 06416  Tel 860-613-2041 Toll Free 866-521-ICPA  Fax 860-632-1122  website www.icpa.org
Contact:  Gene Guilford gene@icpa.org
For Immediate Release  November 6, 2008
Heating Oil Retailers Ask Feds to Speed Credit Relief
 
Fear, Driven by Wall Street Predictions of $200-a-barrel Oil, Created Ongoing Credit Crisis That Threatens Retailers and Consumers
 
November 6, 2008 (Cromwell, Conn.) – A coalition of nine northeastern energy associations has appealed to U.S. Treasury Secretary Henry Paulson to speed relief from the credit crisis now threatening small businesses and consumers across the country.
 
“We’ve written to U.S. Treasure Secretary Henry Paulson to request an immediate meeting to discuss the nation's banking crisis and the effects that crisis is having on small businesses and consumers,” Gene Guilford, the Executive Director of the Independent Connecticut Petroleum Association, said. “Whatever the federal government may have designed to increase the nation's banks willingness and ability to lend it has not yet worked for consumers or small businesses.”
 
The problem, Guilford said, is that during the summer, speculators drove energy prices to historic highs, and Wall Street insiders like Goldman Sachs routinely “predicted” that crude oil prices would soar even higher, to as much as $200 per barrel.
 
As a result, he said, many consumers demanded to be protected from future price increases, which seemed inevitable, given the Wall Street prognostications. When consumers demanded protection, local retailers went to wholesale suppliers and locked in prices for their customers.
 
Instead, Guilford said, since mid-July prices have fallen 55%. Yet, many retailers are still locked into contracts that require them to pay nearly double the going rate for home heating oil.
 
“These dire predictions from financial speculators created a demand for guaranteed pricing from heating oil consumers,” Guilford wrote in a Nov. 3, 2008 letter to Paulson. “We now have millions of consumers across the country who locked in their prices at over $4.50 a gallon this summer, who can now see a retail price substantially lower than that. The only way our retail companies can swap out their higher-priced wholesale futures contracts for newer, lower-cost supply agreements is to literally buy their way out of them and pay their wholesalers.”
 
Because state law requires retailers who sell fixed-price contracts to, in turn, have their own fixed-price contracts with wholesalers in order to be in a position to fulfill their contractual obligations to customers, dealers have no capacity to simply let customers walk away, Guilford said.
 
The retailers asked Paulson to provide access to capital under the auspices of the recently enacted Wall Street bailout legislation, the Emergency Economic Stabilization Act, so that retailers could work with consumers to get out from under the burdens imposed by the fixed-price contracts.
 
“The only way our retail companies can swap out their higher-priced wholesale futures contracts for newer, lower-cost supply agreements is to literally buy their way out of them and pay their wholesalers,” Guilford wrote. “On behalf of our industry, we respectfully request a meeting with your offices at the earliest possible time for the purposes of discussing, under the Emergency Economic Stabilization Act (EESA), the Department of the Treasury might be able to facilitate the access to the capital we need on behalf of the nation’s heating consumers.”

Guilford said the Hartford Small Business Administration office and the Connecticut Development Authority have gone above and beyond the call in providing advice and assistance, but the agencies need private lenders to make loans before their loan guarantee assets can come into play.

Banks increasingly want 100 percent protection from state and federal agencies and want to completely avoid risk, Guilford said. As a result, the banks have constricted their lending and are making the conduct of business increasingly difficult as the nation continues to slide into a recession.

“We seek no bail out. We seek only to be able to borrow funds and then try to construct relief for consumers,” Guilford said. “Wall Street helped cause this economic calamity, Wall Street and the nation's financial community have gotten $1.3 trillion from the taxpayers, and we ask how long will it take for this taxpayer-funded largesse to trickle down to small businesses and consumers so that we may borrow money and provide relief? We are revolted to read that Wall Street executives will continue to receive their bonuses under the Treasury Department plan, while Main Street continues to wait for the simple ability to borrow.”
 
ICPA has requested the assistance of Congressman John Larson and Senator Christopher Dodd in presenting the letter to Secretary Paulson and facilitating a meeting at the earliest practical date.
 
 

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ICPA represents more than 540 Connecticut based independent businesses. These businesses employ 13,000 Connecticut citizens and supply the majority of our state's 1,600 motor fuels outlets and 350 heating fuels dealers. ICPA's offices are at 10 Alcap Ridge, Cromwell, CT  06416.  For more information about today's Press Release, contact Gene Guilford or Chris Herb.