Energy Policy questions

[Flatlander]

The following is taken from Kaith's political platform:

Environment/Energy
- Encourage US Oil Companies to update and modernize their refining capacity.
- No drilling in Arctic Refuge
- Encourage "Clean Air" alternatives such as wind, hydro and solar power, as well as 'fuel cells'.
- Encourage private companies to 'clean up' their local areas. Provide federal funding for water and land reclamation.
- Tighten pollution standards and raise penalties for non-compliance.
- Expand Federal environmental protection coverage in national parks and resources.
- US Independence from Foreign energy imports within 10 years.
- Raise MPG requirements and push for more efficient autos.

I am curious through what method you intend to "encourage" clean air alternatives. Elsewhere, you reference a ten year goal in making
the US energy supply independent of imports. Can you give us a roadmap to that goal, and explain specifically why ten years was chosen, as opposed to say, 4 (one mandate rather than 3)?

 

[Bob Hubbard]

Ten years seems to be a nice round number to allow for new energy sources to be both developed and put into production, and older less efficient or friendly ones phased out.

I see a combination of tax breaks for companies that implement environmentally friendly policies, as well as 'sin taxes' for those that do not.

The oil companies have not built new refineries in this country in I believe 30+ years. They have however continued to shut down aging systems due to environmental issues. This has resulted in a serious backlog in refining of crude into fuel oil and contributed to the insane rise in fuel costs while at the same time giving the oil companies record profits. (US oil companies I might add). I would start by removing tax breaks from them and creating an independent committee to investigate the claims that they are gouging the consumers. If found guilty, I will fine them accordingly and use that money to fund oil-alternatives.

The first 4 years would be a Research and Development period, with a focus on higher MPG, hybrid vehicles, and environmental cleanups. The last 6 would be the implementation phase as older refineries are phased out, newer more efficient and environmentally sound ones built, as well as additional alternatives. I believe the US has enough oil in it's own land (plus what we get from Canada) to support us for another 50+ years. With proper research we can be 'weened' from that reliance by then.

 

[Flatlander]

Ten years seems to be a nice round number to allow for new energy sources to be both developed and put into production, and older less efficient or friendly ones phased out.

So, essentially, you have arbitrarily chosen 10 years.

The problem I see with setting goals, particularly lofty ones such as this, so far off in the future, is that your mandate can only last 4 years, possibly 8 with re-election. You would eventually have to give up authority over the completion of the project. In order to guarantee completion, given the time frame, what would you do?

.... and creating an independent committee to investigate the claims that they (oil companies) are gouging the consumers. If found guilty, I will fine them accordingly and use that money to fund oil-alternatives.

Guilty of what? Is there already a "gouging" law in place, or must you write and pass one specifically for this application? How do you define "fining them accordingly"? Alternative energy will require a huge amount of capital - particularly if you intend to wean the American thirst for oil off of foreign supply within 10 years. Also, Canadian oil is still foreign supply.

 

[Bob Hubbard]

Part of the problem here is that a project of this magnitude will not be completed within my time, even if I am choosen to serve 2 terms. My goal would be to lay enough groundwork to cause a 'snowball' effect and have the work carry on after I am gone.

Part of this would be to gather those who truely understand the details of this project, and whose loyalty lies not in party lines, or corporate greed, but honestly building the future.

As to the laws, yes I do believe there are existing laws in place, however they are either flawed or unevenly enforced. One of my first tasks will be to sort out that situation and form a plan of action to deal with it accordingly.

"Fining accordingly" is defined by me as 'costing them enough for it to hurt them, but not destroy them'. A $10,000 fine on a $600,000,000,000 industry is nothing. That is like fining a multi-millionaire a buck.

I believe that we have enough capped wells in Texas that if we uncap and start pumping, we can feed our domestic requirements fine for quite some time. The only reason we don't is because US oil companies can't get the $$ they want for the domestic.

 

[Flatlander]

I believe that we have enough capped wells in Texas that if we uncap and start pumping, we can feed our domestic requirements fine for quite some time. The only reason we don't is because US oil companies can't get the $$ they want for the domestic.

Does this mean that your Government will acquire those assets and put them use, even if at a capital loss? I assume that the reason they are not currently being exploited is due to a lack of economic viability.

 

[Bob Hubbard]

My understanding is that the companies that own those wells can't get the price they want for the oil, so they import cheaper foriegn oil. The main reason why we are now paying $2/gal at the pump is because that is what they want it to be.

The US had 263 refineries in 1982. In 2002 we had dropped to 159, with a net per day loss of 441,501 barrels per calendar day in capability.

Myths and Facts about Oil Refineries in the United States

The Bush administration blames environmental rules for causing strains on refining capacity, prompting shortages and driving up prices. But in reality it is uncompetitive actions by a handful of companies with large control over our nation’s gas markets that is directly causing these high prices.

Myth 1: Oil refineries are not being built in the U.S. because environmental regulations, particularly the Clean Air Act, are so bureaucratic and burdensome that refiners cannot get permits.

Fact: Environmental regulations are not preventing new refineries from being built in the U.S. From 1975 to 2000, the U.S. Environmental Protection Agency (EPA) received only one permit request for a new refinery. On the other hand, oil companies are regularly applying for – and receiving – permits to modify and expand their existing refineries.[1]

Myth 2: The U.S. oil refinery market is competitive.

Fact: Actually, industry consolidation is limiting competition in oil refining sector. The largest five oil refiners in the United States (ExxonMobil, ConocoPhillips, BP, Valero and Royal Dutch Shell) now control over half (52.2%) of domestic refinery capacity. Only ten years ago, these top five oil companies only controlled about one-third (34.5%) of domestic refinery capacity. This dramatic increase in the control of just the top five companies makes it easier for oil companies to manipulate gasoline supplies by intentionally withholding supplies in order to drive up prices. Indeed, the U.S. Federal Trade Commission (FTC) concluded in March 2001 that oil companies had intentionally withheld supplies of gasoline from the market as a tactic to drive up prices—all as a “profit-maximizing strategy.” These actions, while costing consumers billions of dollars in overcharges, have not been challenged by the U.S. government.

Myth 3: The United States has maxed out its oil refining capability.

Fact: Oil companies have exploited their strong market position to intentionally restrict refining capacity by driving smaller, independent refiners out of business. A congressional investigation uncovered internal memos written by the major oil companies operating in the U.S. discussing their successful strategies to maximize profits by forcing independent refineries out of business, resulting in tighter refinery capacity. From 1995-2002, 97% of the more than 920,000 barrels of oil per day of capacity that have been shut down were owned and operated by smaller, independent refiners. Were this capacity to be in operation today, refiners could use it to better meet today’s reformulated gasoline blend needs.

The energy bill will do nothing to reduce high prices of gasoline because it fails to improve regulations of an oil industry that is over-concentrated or rein in demand by adopting tougher fuel economy standards.




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[1]Committee on Government Reform Hearing, “Potential Energy Crisis in the Winter of 2000” 106th Congress, (Sept. 20-21, 2000).

I also quote Senator Joe Lieberman who said it plainly:
"Finally, as we look for a culprit for the gas price spikes, I think it is important not to overlook the most obvious possibility. In the first quarter of this year, we all know that gas prices were abnormally high. In the first quarter of this year, we also know that the oil industry reported record profits – according to one company, as a result of “higher prices for its products.” Wouldn’t it be a reasonable assumption to make that the oil industry’s high profits were financed by high prices at the pump? I recognize there are more complexities involved here, and OPEC is driving up the prices of oil throughout the world, but if one were to take a step back and view the larger picture, it just may be that simple."

H. Josef Hebert wrote "It’s a good time to be in the oil refinery business. Demand for gasoline is high, and profits are pouring in at a record clip.
With that combination, you would think oil companies would be falling over each other to build new refineries. Not so. There has not been a new refinery built in the United State in 28 years, and more than 200 smaller facilities have closed."

We're seeing a lack of capacity, record prices, record profits and yours and my wallets taking the pounding.


References:
http://www.eia.doe.gov/emeu/finance/mergers/refcap_tab2.html
http://www.citizen.org/print_article.cfm?ID=11829
http://epw.senate.gov/hearing_statements.cfm?id=221478
http://www.thestate.com/mld/thestate/9268265.htm