Making a Mockery of Conservation

A senior energy analyst at the recent API (American Petroleum Institute) convention warned that if the U.S. petroleum industry doesn't reduce its refining capacity, it will never see any substantial increase in refining margins...

- Internal Chevron document, November 30, 1995

Billionaire oil baron John Paul Getty knew that the secret to accumulating great wealth was to never miss an opportunity. He even installed a pay telephone at his English country estate to ensure that guests paid for their own calls. If he wasn't going to get your dime one way, he'd get it another.

The Bush regime follows the same methods to accumulate wealth and power, and they've had no trouble finding ways to use the recent hurricane disasters to keep fortunes flowing their way.

Bush and the Republicans have a well-known agenda of removing all regulatory restrictions on industry. They have already suspended labor and contracting laws to "speed" Gulf Coast reconstruction. Now they are using the disaster-spawned energy crunch to break down environmental laws and restrictions that they failed to destroy with last summer's energy bill. Three big ones are now in their sights: the Clean Air Act, the Arctic National Wildlife Refuge, and restrictions on offshore oil drilling.

The House is scheduled to vote today on what's being called the "refinery bill" after the perceived need to hurry up and build a lot of new oil refineries. All summer long (since well before hurricane season), the business press was blaming high gas prices on a lack of refinery capacity. Supposedly, strict environmental laws have kept new refineries from being built. But the reality is far different.

Several years ago, Senator Ron Wyden's office started looking into the issue of U.S. refinery capacity and found documents -- oil industry internal memos -- that show that oil companies deliberately shut down refineries all through the 1990s in order to keep supply throttled and profit margins high.

Wyden stated: "Information I have received during my ongoing investigation raises serious concerns that the nation's major oil suppliers have set out in a strategic effort to orchestrate a financial triple play, a coordinated effort that would reduce supply, raise prices at the pump and relax environmental regulations."

Between 1995 and 2001, 24 refinery closings took offline nearly 830,000 barrels of oil per day. At the same time, oil industry profits rose hugely. Taking the example of Texaco, the report found that while the company's production steadily decreased from 1998 to 2000, its net income more than quadrupled during the same period. Texaco gets high marks as an energy hog. You can read Wyden's report here. [PDF]

Now that they've got the reduced supply and high prices they wanted, the oil industry is working on the relaxing-environmental-rules part of their triple play, and that's what the refinery bill is really about.

The real target of the refinery bill is the Clean Air Act's New Source Review (NSR). The NSR program requires owners of aging power plants and industrial facilities to modernize pollution controls whenever they expand their facilities and increase emissions. But the refinery bill doesn't just exempt refineries from New Source Review requirements. It exempts ALL energy industry facilities -- approximately 20,000 large industrial facilities and power plants across the country -- not just on the Gulf Coast.

The refinery bill would also allow cities with the worst smog problems to simply skip their cleanup deadlines for years. And it would take refinery permitting authority away from states, keeping the power flowing to the federal government.

The bill would also repeal the one environmental accomplishment that the Bush administration can take credit for: EPA's new clean diesel standards. A great chance to clean up that mistake!