Today at a hearing on high heating oil prices, Sen. John F. Kerry (D-Mass.), announced legislation with Senator Olympia J. Snowe (R-Maine) to help small businesses suffering from rising heating fuel costs. Heating oil distributors are facing a credit crunch as they are forced to take out loans to cover higher costs for heating oil while their customers struggle to pay rising bills. Kerry and Snowe's bill will give businesses impacted by high heating oil costs access to credit through disaster loan programs at the Small Business Administration.
"It might be summer outside, but as families sit down to sign heating contracts for the winter, consumers and small businesses are feeling the chill of skyrocketing heating oil prices," said Senator Kerry, Chairman of the Committee on Small Business and Entrepreneurship. "We need to act now to make sure that small businesses impacted by these rising energy prices have access to capital so that they can weather this storm, and so the six million families in the Northeast that rely on heating oil to stay warm in the winter will be safeguarded from supply disruptions."
"We are facing an energy crisis of the highest order and Congress must curb this looming catastrophe because this is a matter of life and death - when people can't afford the cost of home heating oil, they simply freeze," said Senator Snowe, the Committee's Ranking Member. "Consumers and small businesses are being stretched to the limit and beyond, but nowhere is the ensuing calamity looming larger than in New England where just getting through this winter is fast-becoming our number one priority. I fear that parts of Maine might, quite literally, become uninhabitable for many this coming winter."
Sandra Farrell, owner of Northboro Oil Co., a small oil distribution business located in Northborough, Massachusetts, spoke about the challenges faced by heating oil distributors, many of which are small, family owned businesses.
"The current price of product is unpredictable and severely volatile," said Farrell. "Every day we face increases in the price of fuel, historically high accounts receivables, insufficient lines of credit, shrinking margins due to higher costs of operations and angry customers who believe the small oil dealers like us are raking in the same obscene profits as the big oil' companies. As a small business owner, it pains me to see my customers suffer and not be able to do more to help."
Michael Ferrante, President of the Massachusetts Oilheat Council, testified that the high price of heating oil will continue to rise as the price of crude oil rises. It's estimated that heating oil costs have risen 116% since 2005, and heating prices in New England are currently as high as $4.65 per gallon, or $2 per gallon higher than last year. Michael Stoddard of Environment Northeast discussed innovative energy efficiency programs that can help consumers deal with rising heating oil prices.
Kerry and Snowe's legislation would allow small businesses hurt by increases in the price of heating fuel to receive loans through the Small Business Administration (SBA) disaster loan program. Originally introduced by Kerry in 2001 as the Small Business and Farm Energy Emergency Relief Act, similar Kerry legislation has already passed the full Senate three times- once in 2001, and twice in 2005. Economic-injury disaster loans give financially strapped small businesses sufficient working capital until normal operations resume or until they can restructure or change the business to address market fluctuations. These direct loans are available at subsidized interest rates of 4 percent or less.