The U.S. refining industry needs to tread carefully in its response to the Environmental Protection Agency's effort to raise air-quality standards for ozone and small particulates. It also needs to keep treading aggressively.
The issue holds a clear political hazard for the industry. By resisting EPA's offensive-as it must-the industry opens itself to the charge that oil companies care about profits more than health.
It's a threadbare trick of propaganda. And it works every time.
It works because of the satisfaction superficial analysts derive from divining the motivations behind interests in political conflict. Raising ozone and particulate standards forces refiners to increase production of reformulated gasoline, which increases costs and lowers profits; therefore, refiners oppose the proposed standards. How savvy it can feel to point this out.
Yet refiners breathe the same air and have the same health concerns as anyone else. What sort of fool chooses to breathe noxious air for the sake of profits? Interest diviners seldom think to ask.
Faulty conclusions
Refiners are concerned about much more than profits here. Many of them, in fact, would make nice money if everyone had to increase production of reformulated gasoline and low-sulfur diesel fuel.
Refiners resist EPA's proposal because they believe the agency has leaped to faulty conclusions about the health effects of ozone and particulate pollution. They think that on the basis of those conclusions EPA has proposed costly regulations that will do no good. For refiners to say so is not to scoff at health. But that didn't stop the Natural Resources Defense Council recently from equating refiners' reactions to the EPA move with the tobacco industry's stance on cigarettes and cardio-pulmonary diseases.
For the refining industry, it will be insufficient, however essential, to assert that oil companies do indeed care about health. NRDC and like-minded pressure groups will continue to dismiss such claims with smug mischaracterizations of refiners' economic motivations.
So the industry must appeal to external interests-and not just because doing so will help make the case. If EPA has its way, the interests of fuel consumers will suffer.
The National Petroleum Refiners Association and others in industry have demanded that EPA not shirk its responsibilities by ignoring the costs of its proposal. They're right to do so. And the way to drive home the point is to stress whom the costs will most affect.
With refining margins pinched by rising costs and competition, consumers will bear most of the load. EPA says costs shouldn't matter because they'll lead to health benefits. Yet its own scientific advisory commission doubts the assertion. EPA wants to force costs onto fuel users with no reasonable assurance that there will be appreciable gains in health. Its refusal to relate prospective gains and costs is irresponsible.
This is the line of argument most likely to receive attention and the one on which refiners should concentrate. An industry whose political interests align with those of its consumers stands on solid ground.
At the same time, refiners should not deny their own motivations, some of which are certainly economic. But economic concerns are secondary.
Ambushing compliance
What should worry refiners even more than the new investments they may have to make is that this isn't the first time EPA has ambushed industry compliance with clean-air rules. Oxygen-content rules concocted to benefit ethanol producers leap to mind. Then there was the indulgence to cities initially volunteering to require reformulated gasoline then reversing themselves at the last minute.
The biggest private interest refiners have in the ozone-particulate controversy relates not to money but to a serious question of governance: Can EPA, the most important regulatory authority for U.S. makers of hydrocarbon fuels, be trusted?
Copyright 1997 Oil & Gas Journal. All Rights Reserved.
