Statement of Julie A. Gill, Executive Director/CEO, Oil Heat Institute of Rhode Island

On the Waterfront Plan and the Allens Avenue & Port Redevelopment Plan

November 30, 2009

Marine Terminal Capacity in Rhode Island

The State of Rhode Island had 383.4 million gallons of storage in the 1980’s, but some of the “big oil” companies got out of the distribution business, leaving a gap. Terminals closed with no one to operate them, leaving us with just 201.4 million gallons today for all fuels—gasoline, diesel, heating oil, kerosene, biofuels and jet fuel. We now have nearly half the capacity, 47 percent less, than we had 29 years ago despite the fact that our population has grown since that time by 10.6 percent and our fuel needs have grown.

Several years ago, a 40-foot deep, 14.4-mile long channel was dredged into the Port of Providence at a cost of $65 million with the use of federal and state funds, creating a superhighway for commercial shipping. The significance of the dredging by the federal government was due to their understanding of the importance of the port and the businesses that operate there. The economic value of this deep-water channel cannot be lost.

Fewer terminals mean less competition for price and cause long lines for trucks waiting to pick up product during severe weather. Our efforts to get terminals re-opened were stymied at the time by the City of Providence’s newly-announced Three Cities Plan, placing a pall over the area ever since.

The possibility of a marketer making the necessary infrastructure investments, only to have the city take the property by eminent domain, was enough to dissuade them or any other waterfront-dependent business from moving there. The fact that this land is unoccupied today is the city’s own doing. The Supreme Court’s New London decision adversely affects any possibility of investment along the Providence waterfront as long as these mixed-use and eminent domain threats remain. Please learn from their mistakes. Contrary to what you may have heard, there is nowhere that mixed-use industrial and residential have cohabitated peacefully.

US Department of Energy

For a number of years, Rhode Island had the security of knowing that, in the event of a supply failure on the East Coast, the US DOE had a Northeast Petroleum Reserve right here in Providence. Because of the lack of storage here, that reserve was moved to Connecticut. It will be difficult, at best, for Rhode Island and the New England states to our north to receive this fuel when needed.

Not only has there been a dramatic decrease in marine terminals in Rhode Island, the same is true along the entire East Coast, as was mentioned in the DOE letter to Governor
Carcieri. It is a terrible mistake to believe that we could truck in product from a nearby state (See “Transportation and Tanker Ships” below.)

Move to Quonset?

It would cost at least $50 million to dredge a channel at Quonset to allow for tankers to dock there. Since Quonset is not a federal channel, there would be no federal funds available to help pay for the dredging. A recently-concluded study of working waterfronts throughout the state, conducted by a Sea Grant to the Coastal Resources Center at URI, has determined that there is no land available at Quonset for a marine terminal.

Transportation and Tanker Ships

Eight years ago, the RI DOT testified at a hearing that Quonset does not have the transportation infrastructure necessary to support tanker traffic. The question begs to be asked, “Where could a new terminal be placed that has the necessary depth and the transportation infrastructure available?”

It would take 945 10,000-gallon tanker trucks coming in and out of the state to supply the petroleum products from one tanker ship. Heating oil and diesel fuel are combustible products; therefore, there is little chance of fire and no chance of explosion in the event of an accident. There would be an enormous amount of increased tanker traffic containing jet fuel to T. F. Green and an untold increase in gasoline traffic. Catastrophic results could occur in the event of an accident with both jet fuel and gasoline, which are highly explosive. Can we afford to take this risk?

Supply

We have been told that out-of-state suppliers will very likely not be able to supply our needs in Rhode Island even if we could transport the product over the road.

The Future of Heating Oil/Bio-Fuels

The oil industry is committed to improving the environment. At an oil-industry summit in September, 2009, the oil-heating states committed to working towards a cleaner fuel by adding a 2% bio-blend and reducing the sulfur content of heating oil as soon as possible, with increases in the bio-blend amounts as supply and technology permit. Just a 5% blend with heating oil makes heating oil just as clean as natural gas for carbon dioxide emissions. Heating oil does not emit methane (natural gas,) a greenhouse gas that is 72 times worse for the environment than carbon dioxide (over a 25-year life.) In order to accomplish our goals of making heating oil and diesel fuel cleaner than ever, we need additional storage tanks to hold the biofuels; therefore, we need an increase, not a decrease in petroleum storage tanks.

Certain persons have stated that we won’t need storage for petroleum products in the near future because we won’t be using these products any longer. These people need to be asked, “What will we use instead?” You can’t attach a pinwheel to the back of a car and hope for a breeze. It is an irresponsible and ill-informed message.

The fact is this—that the new bio-heating industry has the brightest future of all. Blended renewable products that produce clean energy are our future and reduce our dependence on foreign oil and natural gas. Natural gas has no renewable blending possibility that we know of. Will we decrease consumption of heating oil? Yes, but it will be replaced with renewable biofuels that also require storage.

Heating Oil Facts, Revenues and Expenses

In 2006, 327 million gallons of #2 heating oil alone came into Rhode Island. Approximately one-half of that, 163 million gallons, was used here, with the rest going to nearby Massachusetts and Connecticut. Annual sales of heating oil in Rhode Island are about $441.5 million, with an estimated payroll of $38 million. These revenues do not include other fuels.

Each tanker brings more than $28 million in taxable revenues to the state, not including fuel taxes and sales taxes. Those revenues would be lost if we had to purchase petroleum products from another state.

The cost to the consumer for every gallon of gasoline, heating oil, diesel fuel, etc. would increase at least 4 to 5 cents at a time of great economic hardship on the citizens of our state.

Zoning Laws

Wise persons of the past recognized that certain uses do not belong together. Zoning laws were enacted for that very reason, to protect each type of land use. Please avail yourselves of their time-honored wisdom and shut the door on a decision that will surely cause harmful results.