I wrote about this a few days ago … East Coast refinery closings.
Fearing gas price spikes on the East Coast this summer, Washington pols are trying to talk refiners out of closing unprofitable refineries.
It’s the EPA and their Obama regulations they ought to hector.
The untold story behind soaring pump prices is that major U.S. refineries are going out of business and creating at least regional shortages thanks in no small part to costly EPA rules.
Over just the past six months, three refineries supplying about half the gasoline, diesel and jet fuel to the East Coast have closed, including two owned by Sunoco Inc. They say they simply cannot make money anymore.
Philadelphia-based Sunoco’s refinery business in the Northeast has lost almost $1 billion over the past three years as U.S. demand for gas fell and the cost of foreign crude soared.
But over the same period, it had to shell out “significant expenditures for environmental projects and compliance activities” to satisfy onerous EPA mandates, according to the company’s latest 10-K report.
In fact, it’s spent more than $1.3 billion just to comply with stricter EPA rules, which carry stiff fines or penalties for violations. Sunoco fretted that these regulatory costs would grow exponentially under the Obama administration, which has hit some of its refineries with fines.
“During 2009, the EPA indicated that it intends to regulate carbon dioxide emissions, (which) could result in increases in costs to operate and maintain the company’s facilities, as well as capital outlays for new emission control equipment at these facilities,” the company warned investors in its 2011 report filed with the SEC.
“Compliance with current and future environmental laws and regulations likely will require us to make significant expenditures, increasing the overall cost of operating our businesses, including capital costs to construct, maintain and upgrade equipment and facilities,” Sunoco added.
“To the extent these expenditures are not ultimately reflected in the prices of our products or services, our operating results would be adversely affected.”
In the end, the company could not weather market crosscurrents long enough to recover the government-induced costs. It bled so much money that it decided to exit the refining business entirely.
A Sunoco said that “the cost of complying with environmental requirements” was one of the factors that led it to decide to exit refining.
Here’s how it works: Prices fixed on both ends, raw material, oil, and finished goods, gasoline. No room left for profit, so the business choice is the refinery closes. Just what Chu, Sunstien want to have happen, and just what Obama ordered the EPA to make it so. Well now, that’s a much clearer picture we have materializing, wouldn’t you say?
Did you ever wonder how oil is $107 a barrel but gasoline is as if oil were $150 a barrel? Strange, the missing ingredient is EPA regulations. Smack head with palm of hand. And laugh.
Drivers in the Northeast will be hit hardest by the shuttering of its large plants in Philadelphia. This has spurred the Energy Department to warn of capacity shortages along the East Coast and a “spike” in gas prices this summer.
So why the lies Mr Pres, you afraid people will figure out the truth?