Aug
25
Cutting Off The Head To Spite A Face
August 25, 2009 | 4 Comments
I usually pass on studies that are sourced specifically by an industry to make their point, seeking rather to use academic works. Also on the miss list are those dumbfounding government projections. But the American Petroleum Institute, granted the central megaphone for independent big oil, has a better than average record, particularly when the work is always farmed out to the high grade class of research and study companies. Many businesses, jobs, investors and consumers do watch this level of research very carefully.
Yesterday the API released the study they contracted from the global consulting firm EnSys Energy of the impact of the “American Clean Energy and Security Act”, which passed the House of Representatives back in June. If the assumptions come to pass the projections show there will be a huge slice of the U.S economy shredded.
The effect of Waxman-Markey cap and trade bill, aside from making Al Gore and his cronies billionaires, for petroleum users is the U.S. economy will be more dependent on imports of gasoline, diesel, and other petroleum fuels and products because U.S. refining production would be shifted overseas where the Cap & Steal law wouldn’t apply. Consumers will get access to fuels at a higher prices while likely hundreds of thousands of jobs will disappear. Do your community multiplier and the impact is devastating.
Its not like all the refineries will close in an instant, rather investment in U.S. refining capacity would plummet because the cost of doing business would soar. So, production at U.S. refineries with high-grade emission rates would drop while production at refineries in countries that do not limit their own greenhouse gas emissions and poor grade emission rules would rise. The impact on global refinery greenhouse gas emissions could be significantly higher as reductions in U.S. emissions mostly would be offset by increases in emissions in other countries. Cut Off That Head!
API’s Jack Gerard asks that the Democratically Congress to do the impossible, “Congress needs to analyze carefully the impact of any climate policy on ordinary Americans, American jobs and American companies.” Whatever makes him think that will even happen with 60 votes in the Senate and a sizeable majority in the House in democratic hands? “Climate legislation should not come at the expense of U.S. economic and energy security, “ Gerard offers, that’s a simple message millions need to send to the Capital.
How far would the decline of U.S refining go? On tours I’ve heard the numbers, hundreds of company employees, hundreds of local contractors with employees, too. That entire payroll gets spent, in the community, the nation and spreads across the whole planet. The Waxman-Markey bill isn’t about clean air of diminishing humanities’ impact on the climate – it’s about the money, a disaster for most and a boon for a select few.
The political game is about inequitably distributing free emission “allowances” to various business sectors. The gasoline, diesel, jet fuel, home heating oil and products get soaked for 44% of national emissions, by leveling your personal emissions fees on the products you use, at the refinery. That’s where the democrats plan to get you. They hope that the money will flow up without a challenge. As a sop the democrats have offered the refinery business 2.25% of free allowances. A close reading of the current version reveals that some businesses get free allowances beyond their emissions. Those excess free allowances would be sold for profit. Money from nothin’.
Waxman-Markey Allowances. Click image for the largest view.
The Ensys study expects the U.S. would need to increase its imports of petroleum fuels on top of the crude oil imports in order to meet as much as nearly one-fifth of U.S. refined product demand in 2030 if the Waxman-Markey bill becomes law, double what imports would have been. I’m not buying it. It will much worse.
The study offers only that production could plummet by as much as 25% (4.4 million barrels per day) and investment in U.S. refining could fall by as much as $90 billion, a decline of 88 percent by 2030. Twenty one years to chew off 25% isn’t so hard to swallow, but who believes that any gasoline, diesel, jet fuel or home heating oil wholesaler is going to buy U.S. products when imports will be much cheaper? Not this writer. It will be more and faster.
Meanwhile, some Wall Street analysts say that some refineries may have to close whether or not the Cap & Steal legislation passes. Besides just that, U.S. gasoline consumption peaked in 2007 suggesting that Waxman-Markey or not, it’s all downhill hereon, as biofuel mandates and improvements in car mileage chip away at oil demand.
It’s a huge con, the idea that CO2, a 0.035% part of the atmosphere will destroy the habitability of Earth with its ability to change the amount of heat retained is too much to bear. Competent scientist’s need to stand up, and shout, soon.
This writer senses the shift of wealth offshore will be much worse than the Ensys study. Many readers will recall just how fast manufacturing left the U.S. for lower cost producing countries, the same will happen for manufacturing fuels, probably even faster.
The Ensys work is credible as model based studies go. Their World model is used across most of the prognostication industry as well as the U.S. Department of Energy, the U.S. EPA, the World Bank, POEC, Bloomberg and a raft of others. As models go the Ensys World model has a large user base. That’s a lot of judgment to call into question.
It gets to this, Americans can upgrade crude oil to fuels and other products here, with the investment, jobs, profits, taxes and community incomes or choose to buy already made fuels with the investment, jobs, profits, taxes and community income out there in foreign countries.
Which will you choose, home or abroad? This time it’s a choice by an elected government intrusion; it has nothing whatever to do with the markets.
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The President said he would put Coal Power Plants out of business while campaigning in San Francisco.
It’s not like we were not warned.
Link to pdf is broken.
I’ve left messages with the API about the link going to an on page java script. I hope to get a resolution, soon. In the meantime, at the bottom of the linked API press release page is their java link which will get you the pdf.
BW
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