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Greens thwart gasoline production

By Steven Milloy
June 12, 2008

Four-plus dollar gasoline is forcing Americans to realize that increased domestic oil production is needed to meet our ever-growing demand for affordable gasoline.

But even if the Greens lose the political battle over drilling offshore and in places like the Arctic National Wildlife Refuge (ANWR), they’re nevertheless way ahead of the game as they implement a back-up plan to make sure that not a drop of that oil ever eases our gasoline crunch.

The Sierra Club and the Natural Resources Defense Council (NRDC) successfully pressured the U.S. Environmental Protection Agency to block ConocoPhillips’ expansion of its Roxana, IL gasoline refinery, which processes heavy crude oil from Canada, reported the Wall Street Journal (June 9). The project would have expanded the volume of Canadian crude processed from 60,000 barrels per day to more than 500,000 barrels a day by 2015.

After the Illinois EPA had approved the expansion, the Green groups petitioned the federal EPA to block it, alleging that ConocoPhillips wasn’t using the best available technology for reducing emissions of sulfur dioxide and nitrogen oxides. Apparently the plant’s planned 95 percent reduction in sulfur dioxide emissions and 25 percent reduction in nitrogen oxides wasn’t green enough.

NRDC’s opposition is quite ironic since ConocoPhillips and the activist group are actually teammates in the global warming game. Both belong to the U.S. Climate Action Partnership (USCAP), a coalition of eco-activist groups and large companies that is lobbying for global warming regulation.

So even though ConocoPhillips is aiding and abetting the NRDC to achieve the Green dream of absolute government control over the U.S. energy supply, the enviros are still in take-no-prisoners mode, refusing to allow the expansion of a single refinery. Imagine what the rest of us can expect from the Greens.

Meanwhile in California, Green groups are working through the state attorney general’s office to block the upgrade of the Chevron refinery in the city of Richmond. The $800 million upgrade would essentially expand the useable oil supply by permitting the refinery to process lower quality, less expensive crude oil.

California attorney general, ex-governor, and climate crusader Jerry Brown claims that the upgrade will produce an additional 900,000 tons of greenhouse gas emissions per year. But Chevron says that the upgrade will actually reduce GHG emissions by 220,000 tons.

Whose figure is closer to the truth? It’s hard to know for sure at this point, but it’s worth noting that material false statements made by Chevron are prosecutable under the federal securities laws and California state law, while Jerry Brown and the activists can say pretty much say whatever they want without legal accountability.

Whatever the facts are, Brown and the city of Richmond insist that Chevron eliminate 900,000 tons of GHG emissions so that the upgrade will be “carbon neutral.”

While the Greens remain vehemently opposed to the project, it seems that their plans for blocking the refinery might go awry as Brown and the local government may eventually side with Chevron rather than the Greens -- but only because the company has deep pockets and is shakedown-able.

Brown and the city have proposed that Chevron ensure that half the total emissions reduction projects be undertaken onsite at the refinery and the other half be done either in the city of Richmond itself or elsewhere in California.

Translating the latter part of this “offer that can’t be refused:” Chevron essentially must purchase 450,000 tons worth of “carbon credits” annually from the city of Richmond or the state.

As the street value of carbon credits is about $10 per ton, Chevron is being “Green-mailed” to the tune of perhaps $4.5 million per year in order to upgrade its refinery -- amounting to perhaps a one percent annual “tax” on the gains in gross revenue produced by the upgrade.

And the local government officials are not the least embarrassed about this extortion.

“When you’re dealing with a refinery where the project will cost close to a billion dollars and someone like Chevron with tremendous resources, that’s not a constraint, so they should do everything possible,” an unidentified state official told Carbon Control News (June 9).

The farcical nature of the entire transaction is underscored by that state official’s apparent lack of understanding about how greenhouse gas-induced global warming is supposed to work.

The official told Carbon Control News that the greenhouse gas emission reductions “are vital to protect low-income minority communities in the Richmond area, which already suffer disproportionate pollution impacts.”

Climate alarmism, of course, is based on the notion of global emissions causing global warming, not local emissions causing local warming. Moreover, the allegation that low-income minority populations are disproportionately harmed by industrial emissions -- the basis of the so-called “environmental justice” concept of the 1990s -- hasn’t stuck since no scientific evidence supports it.

Though Green and local government shenanigans can be a source of endless amusement, let’s get back to the main point.

As the 2005 hurricane season dramatized, oil production itself is only one factor in determining gasoline supply and prices. Damage to Gulf Coast refineries by Hurricanes Katrina and Rita reduced gasoline supplies and increased prices worldwide -- a real problem given that U.S. refineries operate at or near capacity thanks to other Green constraints.

We may produce all the oil we need, but if we can’t refine it, then it won’t do much for reducing gasoline supply problems. So while working to expand domestic drilling, we’ll simultaneously need to expand domestic refining capacity. It will be quite the Pyrrhic victory to finally produce oil from ANWR, and then not be able to do anything with it.