'This bill simply fails the national energy security test'

Bill Holbrook, spokesman for the National Petrochemical and Refiners Association, as the US House Energy and Commerce Committee marked up HR 2454, which would address global climate change by establishing a carbon cap-and-trade system in the US.

May 19th, 2009

Bill Holbrook, spokesman for the National Petrochemical and Refiners Association, as the US House Energy and Commerce Committee marked up HR 2545, which would address global climate change by establishing a carbon cap-and-trade system in the US. The bill was co-sponsored by Reps. Henry A. Waxman (D-Calif.), the committee's chairman, and Edward J. Markey (D-Mass.), who chairs its Environment and Energy Subcommittee.

"The impact of Waxman-Markey is not only significant for domestic refiners, but also for the American driving public, farmers and truckers. In the midst of an economic recession, is it a wise decision to impose even more onerous restrictions on the American energy community? These businesses help drive, both literally and figuratively, our economy.

"Does it make good economic sense to offer up a substantial competitive advantage to foreign energy producers? Indian refiners, for example, are specifically targeting the American market for sales of refined products. All Waxman-Markey will do is ensure that the United States will be outsourcing its energy needs to foreign entities.

"Within that context, consider that more refined products will be produced by foreign companies not bound by the bill's provisions, should it actually pass and be signed into law. Under those circumstances, global greenhouse gas emissions could increase.

"Assuming a conservative carbon price of $26/ton with 2% of the emissions allowances, as the current draft of HR 2454 provides, taking into account the usual 30 days of down-time for maintenance per year, a refinery with 100,000 bbl per day of capacity would have to spend roughly $330 million annually if it were required to purchase emissions allowances for the fuels it produced.

"Aggregated, these costs would total roughly $58 billion per year for the refining community, and escalate over time as the cost of the program increases. The higher the costs that will be forced upon domestic refiners, and ultimately consumers, to comply with the bill, the greater the advantage foreign refiners will have. This bill simply fails the national energy security test."

Contact Nick Snow at nicks@pennwell.com

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