WASHINGTON, August 24, 2009 - The United States will be more dependent on imports of gasoline and other petroleum fuels while U.S. refining production would be shifted overseas if a climate change bill passed in the U.S. House of Representatives becomes law, a study shows.
An analysis by global consulting firm EnSys Energy of the impact of the “American Clean Energy and Security Act”, which passed by a narrow 219-212 vote in the House in June, on the U.S. refining sector showed that investment in U.S. refining capacity could plummet because the cost of doing business could soar. Production at U.S. refineries would drop while production at refineries in countries that do not limit their own greenhouse gas emissions would rise. The impact on global refinery greenhouse gas emissions would be minor as reductions in U.S. emissions mostly would be offset by increases in emissions in other countries.
“This study clearly shows the devastating impact this legislation could have on U.S. jobs and U.S. energy security,” said API President and CEO Jack Gerard. “Climate legislation should not come at the expense of U.S. economic and energy security. Congress needs to analyze carefully the impact of any climate policy on ordinary Americans, American jobs and American companies. A deep decline in U.S. refining activity would have a ripple effect throughout the economy, affecting jobs in sectors beyond the oil and gas industry. Steelworkers, construction workers, even the shop keepers, school teachers and waitresses working in communities where refineries operate would feel the pinch.”
The House climate legislation drives up individual and business fuel costs because it inequitably distributes free emission “allowances” to various sectors. Refiners are held responsible for 44% of emissions, including the refinery emissions (about 4%) as well as consumer emissions from planes, trains, automobiles, heating oil, and other petroleum use. Yet refiners are allocated only 2.25% of allowances. In contrast, some other sectors receive free allowances that match or exceed their obligation.
According to the EnSys study, commissioned by API, the U.S. would need to increase its imports of petroleum fuels in order to meet as much as nearly one-fifth of U.S. refined product demand in 2030 if the House climate bill becomes law, double what imports would have been.
U.S. refining throughput, a measure of productivity, could plummet by as much as 25% (4.4 million barrels per day) and investment in U.S. refining could fall by as much as $90 billion, a decline of 88 percent, by 2030, the EnSys study forecast.
Updated: October 22, 2009