Refineries are the MVP’s of the economy

By |2018-10-25T22:08:38+00:00October 26th, 2018|Energy|0 Comments

By Ronald Stein

The challenges before America are to control world emissions and still stimulate the economy. The two prime movers that have done more for the cause of globalization than any other: the diesel engine and the jet turbine, both get their fuels from oil. Without transportation – there is no commerce. Road and air travel dominate most people’s lives.

A specific example is California which is the most populous state in the U.S. and the most robust economy in U.S., and 5th largest economy in the entire world. California has stepped up as a leader on climate change to reduce carbon emissions to the world’s atmosphere, and pioneered a system of subsidies for wind and solar that sparked a global boom in manufacturing those technologies.  However, the unintended consequences of that environmental leadership may be increasing rather than decreasing emissions.

Many in California are working hard to produce hydrocarbon energy efficiently, reliably, and safely, and many others are working hard to develop alternative energy sources that will efficiently, reliably, and safely produce carbon neutral energy, but despite those appreciative efforts, the state’s energy needs continue to grow to maintain a sustainable energy future for the growing populations of people, vehicles, and businesses.

Most of the California citizens may not be aware that California is an “energy island” to its almost 40 million citizens, bordered between the Pacific Ocean and the Sierra Nevada Mountains. The state’s daily need to support its 145 airports (inclusive of 33 military, 10 major, and more than 100 general aviation) is 13 million gallons a day of aviation fuels. In addition, for the 35 million registered vehicles of which 90 percent are NOT EV’s are consuming DAILY: 10 million gallons a day of diesel and 42 million gallons a day of gasoline.  All that “expensive” fuel is a heavy cost to consumers.

Since foreign refineries, and domestic refineries outside of California all have less stringent environmental regulations than California, any aviation, diesel, or gasoline refined outside the state for California’s use that may result from closing any California refinery would lead to increased global emissions, and excessive costs to import them into California.

California households are already paying about 40 percent more than the national average for electricity according to 2016 data from the U.S. Energy Information Administration. Continuation of that emissions crusade at the expense of our 40 million citizens, and continued funding for the High Speed train, will further fuel the growth of our homelessness and poverty populations.

In addition, Californians continue to pay almost $1.00 more per gallon of fuel than the rest of the country due to a) the state sales tax per gallon which are some of the highest in the country; b) refinery reformatting costs per gallon; c) cap and trade program compliance costs per gallon; d) low-carbon fuel standard program compliance costs per gallon; and e) renewable fuels standard program compliance costs per gallon.

Interestingly, the primary economic reasons refineries even exist is to manufacture the aviation, diesel, and gasoline fuels for our military and transportation industries nationwide. It may be shocking to most, but there are no economic reasons JUST to manufacture the other “stuff” of chemicals and by-products from crude oil that are the basis of 6,000 products from petroleum that are part of every infrastructure and virtually everything in our daily and leisurely lifestyles.

Closure of any of the California refineries would severely impact the following:

  1. The military operations in California.
  2. The aviation industry at 145 California airports (inclusive of 33 military, 10 major, and more than 100 general aviation) that has a daily need for 13 million gallons/day of aviation fuels.
  3. The transportation industry that has a daily need for 10 million gallons/day of diesel fuels, and 42 million gallons/day per day of gasoline to support its 35 million registered vehicles.
  4. The Ports of San Diego, Long Beach, Los Angeles and San Francisco.
  5. The cruise liner industry calling on California ports.
  6. The costs of materials of 6,000 products from petroleum used by every infrastructure that are made from the chemicals and by-products that are manufactured from crude oil.
  7. The 90 percent of our population that cannot afford an EV, leaving them without transportation.

We all know what a refinery maintenance turnaround does to fuel prices temporarily, but closing ANY refinery in California or nationwide would result in a PERMANENT hit to the economy and increased emissions from foreign suppliers.

To minimize world GHG emissions and control costs of fuels on California’s little energy island, the moral reasoning is to provide Californians with affordable and reliable energy, and jobs, by manufacturing those fuels in the most stringently environmental locations in the world, for one of the world’s largest economies, which is within the borders of California.