It may have ignited the Senate filibuster that defeated comprehensive energy legislation in 2004. Still, the nation's refiners are determined to make a methyl tertiary butyl ether liability cap part of a 2005 energy bill.
"It's been near, if not at, the top of our list of needs. It's been front and center for several years," observes Bob Slaughter, president of the National Petrochemical & Refiners Association.
"With liability suits out there aimed at penalizing the entire refining industry for doing something it was required to do by law, we believe that liability limits are fair.
"They would only affect the defective product claim and keep other tort remedies, such as negligence and trespass, intact."
Challenges
It's not surprising if Slaughter and other refining leaders seem to act as if their oil industry segment faces real challenges.
Record-breaking gasoline prices late last spring improved profits dramatically. But the situation could change quickly.
John C. Felmy, chief economist and director of policy analysis and statistics at the American Petroleum Institute, says a "severely cold winter" could create problems with heating oil supplies. Refiners then would have to concentrate on meeting immediate demand when they normally would be preparing for the driving season.
"We continue to have high rates of utilization, running our refineries harder than ever before. There also are fuel formulation changes. We have lower sulfur gasoline in 2005, and we're getting ready for lower sulfur diesel in 2006," he says.
Refiners don't foresee significant problems reducing sulfur in gasoline to 30 ppm. But they are concerned about the ultralow-sulfur diesel regulation that the Environmental Protection Agency has developed.
"While it looks as if refiners can meet the 15 ppm level, there are problems beyond the refinery gate because it's effective at the retail level," Slaughter says. "For every ppm a refiner goes below 15, there's a significant production-cost impact. Refiners want to make certain the product meets the requirement, but if it picks up additional sulfur after it leaves the refinery gate, it has to be sold as another product or reprocessed."
Boutique fuels
Boutique fuels remain a problem, although they have received more attention following fuel supply problems in the Midwest and elsewhere in 2000 and 2001, the NPRA official says. He would like to see a joint study of the problem by the Department of Energy and EPA, as proposed in last year's energy bill.
Asked if public awareness of refining capacity's impact on product supply has grown, Slaughter responds, "There's more work to be done. Since NPRA began its public awareness program 5 years ago, we've tried to get the word out that no new refineries have been built since 1976. Some progress has been made. More people understand that refining is a different part of the oil industry from exploration and production."
