CONGRESS GETS NEW LEADER IN ENERGY SILLINESS CONTEST

Bob Tippee
Editor

US Democrats have pulled ahead of Republicans in the congressional competition for the silliest proposal for energy.

Senate Republicans leaped to an early lead last month with their ill-fated plan to bribe voters with $100 apiece for gasoline (OGJ Online, Apr. 28, 2006).

But House Democrats zipped by them on May 11 when Reps. Rick Boucher of Virginia and John Dingell of Michigan filed legislation to federalize refining.

Citing damage to refineries from last year's hurricanes and consequent increases in fuel prices, the congressmen proposed a Strategic Refining Reserve.

They would commit the secretary of energy to build or restart, then operate, refineries with capacities totaling 5% of US product demand—about 1 million b/d. The aim: to ensure processing capacity is available during supply emergencies warranting withdrawal of crude from the Strategic Petroleum Reserve.

Between emergencies, the People's Refineries would produce fuel for military services.

The capacity target represents five average-size refineries. Running such a collection of assets, amounting to a large independent refining company, is a lot to ask of a cabinet officer traditionally selected on the basis of qualities other than energy expertise. But there are always subcontractors.

Of course, the People's Refineries would have to be run under politically acceptable conditions, meaning that they never be visible to anybody; that they prove before construction that they'd never have accidents; that they emit no pollution; that they benefit favored political constituencies; and that they disturb no ecosystems.

Subject as they'd be to political manipulation and unburdened by efficiencies sought by their privately owned counterparts, the People's Refineries would be costly to build and operate. To help with expenses, they'd want to sell whatever of their products the military didn't need—at cost so as not to gouge consumers. The government would pay the rest.

As the People's Refineries came on stream, commercial refineries now supplying the military would have to seek other markets or shut capacity. Expensive refining capacity needing heavy government funding thus would displace commercial capacity now generating tax revenue. Eventually, there'd be no "reserve," only cost.

In the silliness contest, this will be hard for Republicans to beat.

Note: This feature will appear next on May 26, 2006.

(Online May 12, 2006; author's e-mail: bobt@ogjonline.com)

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