Every time the gas price goes up the issue of no new refineries built comes back. Somehow the oil industry is always the whipping boy. Never the environmentalists, the government, or the real culprits.
Of course the government always promises we don’t need new refineries since clean energy will replace them. That started in the seventies when billions were invested in making this happen. The only result, ethanol. We all know how well that works. When demand for gasoline was up, demand for food was up. Both corn and fuel went up. And, the environmentalists say ethanol puts more CO-2 into the atmosphere than gasoline.
What will Cap and Tax do to the refinery system in the US? The API commissioned a study to answer that. The result, by 2030 17% of refining capacity would be reduced from today’s levels if the bill is passed as proposed. That would mean we would need to import 19.4% more foreign refined products to meet demand.
Why? The bill that passed the house would target the refining industry by requiring them to buy half of the permits and receive 2.25% of the allowances. The power generation industry gets a big chunk of allowances, but the refining industry almost none.
Once again we think we can put the cart before the horse. We are ready to put the hurt on the refiners smugly thinking we don’t need them. What is different now from the seventies when all those billions were spent to find alternative energy? Not much.
The big biofuels bonanza is a bust. The biggest is broke and the next biggest was running a scam. In 2007 they received $3.25 billion of your tax dollars. There is no way the 2010 mandate will be met for biofuels. Maybe 50%. Nice math.
Want to bet the farm on those feather brains in Washington?
If Cap and Tax happens, I can tell you what will happen in refining. There will fewer refineries to produce less gasoline for an economic recovery to occur. Gasoline prices will go up a minimum of $2 a gallon. The Washington response will be gouging. There will be no viable alternative energy response. It’s our fault, we let them get away with the blame game.
