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Northeast Heating Fuel Market: Assessment and Options
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    This study was undertaken at the request of the U.S. Secretary of Energy, Bill Richardson.1 As stated by the President, "I've asked Secretary Richardson to conduct a 60-day study on converting factories and major users from oil to other fuels, which will help to free up future oil supplies for use in heating homes."2 The principal purpose of this study is to examine the feasibility and impacts of converting factories and major users of heating oil to different fuels, and to discuss other possible supply-related policy options that may mitigate future heating oil supply problems in the Northeast.3 This study examines how the market behaved in the winter of 1999-2000, identifies the key price and demographic factors that influence the market, compares the market behavior in 1999-2000 with that in previous winters, and discusses options that could encourage major users of distillate fuel oil to convert to other fuels. Given the oil price environment in the winter of 1999-2000, the options considered are those that could have a meaningful impact over the next 5 years. Throughout this report, the terms "home heating fuel oil" and "heating oil" are used to indicate number 2 high-sulfur distillate fuel oil. There are exceptions to this which, for the sake of improved communication to a broader audience we often simplify-for example, number 1 distillate oil and low-sulfur number 2 distillate fuel can also be easily used for home heating if necessary and available. Price usually precludes their normal use for these purposes.

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