API August studies indicate adoption of Waxman-Markey bill will negatively impact US refining sector and economy
American Petroleum Institute (API) published an August 21, 2009 study by EnSys Energy, entitled “Waxman-Markey Refining Sector Impact Assessment.” Based on its Refining Sector Assessment, EnSys concluded that by 2030, the US refining throughput will be reduced by 4.4 million barrels per day with refineries located in Gulf Coast and California being hardest hit. EnSys also predicts that by 2030 the US decrease in throughput will be balanced by increases of 3.3 mgd in world refining throughput. EnSys predicts that these impacts will correspond with additional negative impacts including reduced annual US refining investments by up to $89.7 billion, reduced refinery utilization (63.4% from 83.3%) and decreases in unemployment. These reductions would parallel increases in capacity, investment and employment at non-US refineries. Given these economic “translocations” a similar translocation of GHG emissions is predicted by EnSys in that the GHG emissions reductions realized in the US would be offset by increases in GHG emissions abroad.
The EnSys study comes on the heels of seven studies published earlier in August and prepared by CRA International describing the economic “hits” certain states (Colorado, Indiana, Tennessee, Ohio, North Carolina, New Mexico, and Texas) will take if the American Clean Energy and Security Act of 2009 (H.R. 2454, ACES) is adopted. API has published several statements since ACES was introduced in the House on May 15, 2009, regarding the Waxman-Markey Bill and its impact on the oil industry versus other sectors (alleging disproportionate burden on oil industry and certain consumers) and US economy, security, energy policy, and environment.
Table 1 below summarizes a couple of metrics produced by CRA’s modeling of economic impact of House of Representatives Climate Bill. A review of Table 1 shows that CRA estimated that the US would lose between 1.5 and 2.5 million jobs between 2015 and 2030, and each household would suffer an average impact to its purchasing power of $910 to $1,170 per year. Of the seven states analyzed Texas appears to take the biggest hit in terms of employment, household purchasing power, and lost tax receipts.
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Table 1 – Summary of Employment, Household Purchasing Power, and State Tax Impacts Due to H.R. 2454 as Estimated by CRA International for US and Seven States (CO, IN, TN, OH, NC, NM, TX). |
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Estimated Projected Impacts |
2015 |
2020 |
2025 |
2030 |
|
US – 2009 Total Operating Atmospheric Crude Distillation Capacity 18,300,358 (Barrels Per Stream Day) |
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Employment[1] |
-1,556,000 |
-1,945,000 |
-2,165,000 |
-2,435,000 |
|
Household Purchasing Power Impact [2] |
-$910 |
-$1,010 |
-$1,090 |
-$1,170 |
|
Carbon Allowance Prices[3] |
$33 |
$42 |
$53 |
$67 |
|
Colorado – 2009 Operating Atmospheric Crude Distillation Capacity 104,000 (Barrels Per Stream Day) |
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|
Employment1 |
-8,900 |
-12,500 |
-17,900 |
-22,200 |
|
Household Purchasing Power2 |
-$760 |
-$850 |
-$980 |
-$1,100 |
|
State Tax Receipts[4] |
-$90 |
-$130 |
-$180 |
-$240 |
|
Indiana- 2009 Operating Atmospheric Crude Distillation Capacity 446,800 (Barrels Per Stream Day) |
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|
Employment1 |
-51,800 |
-58,900 |
-63,300 |
-65,200 |
|
Household Purchasing Power2 |
-$770 |
-$860 |
-$950 |
-$1,050 |
|
State Tax Receipts4 |
-$260 |
-$340 |
-$420 |
-$520 |
|
Tennessee – 2009 Operating Atmospheric Crude Distillation Capacity 182,000 (Barrels Per Stream Day) |
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|
Employment1 |
-29,800 |
-68,200 |
-77,800 |
-80400 |
|
Household Purchasing Power2 |
-$930 |
-$1,150 |
-$1,270 |
-$1,340 |
|
State Tax Receipts4 |
-$190 |
-$290 |
-$370 |
-$440 |
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Ohio – 2009 Operating Atmospheric Crude Distillation Capacity 589,500 (Barrels Per Stream Day) |
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Employment1 |
-79,300 |
-102,300 |
-103,900 |
-114,100 |
|
Household Purchasing Power2 |
-$850 |
-$940 |
-$990 |
-$1,070 |
|
State Tax Receipts4 |
-$470 |
-$640 |
-$770 |
-$960 |
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North Carolina - 2009 Operating Atmospheric Crude Distillation Capacity 0 (Barrels Per Stream Day) |
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|
Employment1 |
-25,100 |
-65,400 |
-63,300 |
-87,000 |
|
Household Purchasing Power2 |
-$530 |
-$680 |
$730 |
$840 |
|
State Tax Receipts4 |
-$250 |
-$520 |
-$600 |
-$860 |
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New Mexico – 2009 Operating Atmospheric Crude Distillation Capacity 144,107 (Barrels Per Stream Day) |
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Employment1 |
-14,500 |
-12,200 |
-14,600 |
-18,900 |
|
Household Purchasing Power2 |
-$920 |
-$950 |
-$1,070 |
-$1,230 |
|
State Tax Receipts4 |
-$100 |
$120 |
$150 |
$210 |
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Texas – 2009 Operating Atmospheric Crude Distillation Capacity 4,938,300 (Barrels Per Stream Day) |
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|
Employment1 |
-180,700 |
-263,100 |
-282,100 |
-340,700 |
|
Household Purchasing Power2 |
-$1,430 |
-$1,600 |
-$1,670 |
-$1,790 |
|
State Tax Receipts4 |
-$1,110 |
-$1,390 |
-$1,650 |
-$2,030 |
We have also included with CRA’s estimated impacts, the 2009 refining capacity metric from the Energy Information Administration for the US (total) and each state analyzed by CRA for the purposes or comparison. On this basis, it is interesting to note that there are several states not analyzed by CRA that have significant refining capacities of near or above 1 million barrels per day, including California (2,078,500); Illinois (956,300), Louisiana (3,101,705), and Pennsylvania (819,500) that likely will be significantly impacted by adoption of HR2454.
Given that the API studies were published during the month of August and Congress is out of session, it will be interesting to see how (if at all) the Senate addresses API’s and the oil industry’s concerns when it reconvenes in September. These projections will likely put increasing pressure on those legislators whose states face increasing unemployment and budget deficits.
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