Refineries Top Political Agenda in Both Washingtons (Reuters)
Bush calls on lawmakers to give oil companies a break. Oil companies, despite record profits, won't build refineries without federal assistance. Northwest legislators, meanwhile, want to build a biodiesel plant to boost the economy and promote cleaner fuels Washington state, and they have the money to fund it. Both proposals would increase supply, although their economic and environmental impacts would be dramatically different.
October 04, 2005
Businesses and farms are suffering from high fuel prices. The Washington state legislature may soon debate a bill that would combat rising fuel costs by funding the construction of a biodiesel refining facility in the state. This news comes as President Bush renews his call to build more oil refineries to lower fossil fuel prices at the pump.
Oil companies demand financial incentives
Major oil companies' increased revenues have led to record profit levels, with the greatest increases in the refining and marketing segments of the industry, according to an independent report prepared for Congress this summer. With record cash balances the oil companies are buying back their stock shares, increasing dividends, and engaging in more acquisitions, the report says.
According to BBC radio reports yesterday, those oil companies have been reluctant since the 1970s to build new refining capacity in the U.S. because of the high cost and regulatory hassles, and have been pushing for help in the form of financial incentives.
Washington legislature earmarks $5 million to boost biodiesel
Rep. Hans Dunshee plans to propose the Energy Freedom project, a bill that would in some way finance the development of a biodiesel refinery in the state. The money is available now.
Exactly how the funding would work is yet to be determined. It might be grants, or low-interest loans, reports Dierdre Gregg in this week's Puget Sound Business Journal. Previous tax incentives passed by the legislature have benefited the state's biodiesel industry, which includes refiner Seattle Biodiesel and retailer SeaPort Biofuels.
If the bill goes through, it would make Washington a national leader in an industry that is gaining attention in the wake of Hurricanes Katrina and Rita. Non-profit Climate Solutions is studying the potential economic benefits of the industry for Washington.
Rep. Dunshee expects the proposal to bring significant economic development, as well as energy security and environmental benefits, to his state. The plant would be built near agricultural areas where mustard and canola crops could provide the feedstock for biodiesel construction. Washington would have a complete, plantation-to-pump biodiesel industry and become a net exporter of the fuel.
Economics 101 argues for biodiesel
If fuel prices continue to climb, demand for fuel will ultimately decline. At the same time, users of fossil fuels could turn increasingly to alternative fuels, like ethanol and biodiesel. The effect could make new oil refineries unnecessary, while increasing demand for renewable transportation fuels.
The Energy Department reported yesterday that the national retail price for gasoline jumped 12.5 cents on one week, reaching the third-highest level ever. In the same week, diesel fuel soared 34.6 cents to a record high. Diesel today is up $1.09 a from a year earlier. Recent high diesel prices created a cost advantage for biodiesel which is, for once, cheaper than diesel.
Federal legislation would help oil companies expand refining capacity
Before the week is out, the U.S. House of Representatives could vote on incentives for oil companies to build and expand refineries.
Bush called the legislation a "a reasonable law." If passed, it would allow current refineries to expand their gas and diesel refining capacity, while also encouraging building new refineries.
Military bases fuel both initiatives
The federal bill would make abandoned military bases and federal land available as sites for new oil refining plants.
Washington state's Energy Freedom project would take money that was set aside by the state to deal with the military base closures threatened in many states following the 2004 elections. None of Washington's bases were closed, so its set-aside is potentially available.
Environmental impacts
The federal incentive bill aims to add two million barrels a day of refining capacity. The legislation would also make it easier for oil refineries to expand without having to install pollution-control equipment.
"The House Energy Committee is rushing the Gasoline Act of 2005 (H.R. 3893) to a floor vote," wrote John Adams of the non-profit Natural Resources Defense Council. "It would excuse oil companies from a key provision of the Clean Air Act, allowing them to dramatically increase air pollution."
Adams says this bill, and another proposed bill for offshore drilling, have nothing to do with helping hurricane victims, nor will they lower gas prices. He calls them "a grab bag of pro-polluter policies so extreme, they didn't make it into last summer's Bush-Cheney energy bill."
In Washington state, meanwhile, the proposed biodiesel plant would produce five million gallons of the alternative fuel, which causes significantly less of the harmful pollutants CO and HC than does diesel.
The federal bill could be debated in Congress later this week. Washington's Rep. Dunshee hopes to have his bill passed in time for planting decisions in March, 2006.
Comments
It would be a mistake for this country to allow any more oil refineries to be built. We need to look towards sustainable, renewable energy sources for the future.
Jason Younker
Alternative Fuels Awareness Organization
http://www.iE85.com/
Posted by: Jason Younker | October 4, 2005 10:52 PM
PLEASE TAKE A MOMENT... Consider the Possibilities.
Why don't we kill two birds with one stone here. Algae is a viable crop for BIO-DIESEl. Boasting almost 50% oil content which doubles its yeild 4 times in a day. Freshwater crops will never come close. OH YEAH... IT CAN BE GROWN IN OUR MOST ABUNDANT RESOURCE... SALT WATER!!! Fed by our waste or animal waste. Only 2 elements: Methanol and Lye need be added to separate the ready to burn fuel. The bi-product of the algae fields is Bio-Methane, which can be broken down to Methanol. There's one. MISSISSIPPI AND LOUISIANA are prime climate and location. Temperate all year, below or at sea level, where cities and homes have to be rebuilt. Why not take the logical step and start the reform by engineering the worlds cleanest cities. Starting the revolution off with American jobs. JOBS for people who LOST EVERYTHING and are in dire need of HOPE and a future. Lets do the same for everyone on this earth. It is in our hands, our voices, and our actions. First let everyone know what we can do and that action with speak loud with your words. This is not something that has playtime on major network TV. It should... and we all know why. I say "Our money earned with our time at work burning away at the pumps and even from our pay before you ever see it." >>>$100 BILLION$<<< That's how much we spend on foreign petrol maybe more. Let's keep it here and refine the technology. Then start on the over seas market and get some money back. Did I say "2 birds with one stone."? I meant 200. By engineering a hurricane buffer to protect from water influx, also creating algae fields for harvest. Along with flushing abilities to allow for room for the swelling seas. Safer and cleaner to ship, store(home heating oil) and handle due to a higher flashpoint than petrol fuels. The whole personal transportation system of the country can slowly integrate. But all trains and diesel vehicles in existence now for shipping and industry need little and more likely no change at all. A Pleasure cruise liner burns up to 12 gallons of fuel for every foot of forward movement. Even more when leaving port. It's exhausted into the ocean so it doesn't bother the occupants. Let alone the more common freight ships. I could go on. So I will. Hawaii reduced 40 tons of used frialator grease monthly by using it as fuel and reduced pollution. 40 tons in one month... Hawaii alone. Imagine that.
The lubricity of Bio diesel is also better than that of current fuels increasing engine life and reducing noise pollution, and !!!EMISSIONS!!! by crippling figures. Lets do it. WARBAR84@aol.com
Posted by: Warren Barber | October 27, 2005 07:19 PM
Forget about windfall profit taxes, just take away the tens of billions in tax breaks that are slated for oil companies in the coming decade.
"Congratulations, Exxon Mobil! (No more need for subsidies, then?)"
http://uncork.blogspot.com/2005/11/congratulations-exxon-mobil-no-more.html
Posted by: Uncork | November 10, 2005 06:18 PM
Follow-up: "Canola seed's low price hinders biodiesel ambitions" (Puget Sound Business Journal 12/9/05 p.14)
Canola seeds are the best source of oil for biodiesel, writes Steve Wilhelm, but the seed prices are so low, farmers won't raise it because they can't make money.
Farmers grow canola in eastern Washington as a rotational crop to boost production of wheat. Farmers are switching to mustard seed, instead, because of canola's low market price, according to the article.
The Canola Commission, interviewed extensively for the article, says it is worried that the proposed WA biodiesel plant will fail because of a shortage of canola seed.
Not mentioned: mustard seed is also used to produce biodiesel.
Posted by: DD | December 15, 2005 01:29 PM
Regarding the above comment about algae to biodiesel, there is real merit to the idea. All that needs to be resolved is the economics of it.
But the science shows this process could completely replace all of our petroleum use plus some of our coal and natural gas use.
Here are the numbers. Feel free to fact check me:
The US produces 6.4 billion tons of CO2 per year, 40% (2.56 billion tons) of which is generated at coal and natural gas-fired power plants.
Greenfuel Technologies has demonstrated a bioreactor which they claim can reduce CO2 by 40% and produce an algae that is 50% oil.
So if these bioreactors were attached to each stationary source of CO2 (at least the power plants), CO2 would be reduced at that point by 40% (1.024 billion tons).
Two tons of algae are produced from the consumption of 1 ton of CO2, so that would make 2.048 tons of algae.
Algae that is 50% oil can make 3 barrels of biodiesel and 1.5 barrels of ethanol per ton, so from this source we could generate 6.144 billion barrels of biodiesel and 3.072 billion barrels of ethanol. That is 9.216 billion barrels of liquid fuel.
The US currently consumes just under 7.7 billion barrels of petroleum.
If the economics are worked out on this, we should be able to eliminate our domestic petroleum use within 15-20 years.
And if the efficiency of the bioreactors to reduce CO2 is improved and other sources of CO2 are used, we could begin to replace coal and natural gas use for power generation, all the while cutting our net CO2 production significantly.
Posted by: A3K | June 1, 2006 08:10 AM