by nuhax » Sat 17 Sep 2005, 23:51:36
$this->bbcode_second_pass_quote('ab0di', 'I')t's more than dubious. It's just more Looney Libertarian claptrap and nonsense. I don't expect much else from Puplava and his ilk.
Care to back that up buddy? Puplava is one of the better financial commentators out there, I listen to Financial Sense regularly and find it a valuable resource and have made money with his advice. You should state some facts supporting your opinions if you disagree with what he said.
Environmental regulations/groups/lawsuits ARE one major factor for the lack of US refineries. In addition it is likely there are other factors as well like the fact that the profit margin was fairly low in the past and margins were shrinking due to refinery overcapacity in the 80s. There was a study done by the feds that showed environmental regs themselves were a small portion of total costs--however my understanding is there were a lot of problems with that study as it did not include lawsuit costs, delays/expected delays in construction and and these related costs as compared to profit margin. In other words, just an example to illustrate why comparison matters: if the environmental reg costs are only 4%, that doesn't sound like much but if profit margin is only 4% above costs w/o regs then the regs eat up the profit. Investors expect profits and good ones for a 5 year project costing billions with a lot of risk and a low profit margin. Also it costs a lot of money to convert exisiting plants to cleaner, newer regs--if a plant is barely profitable or not profitable then it makes more sense to shut it down than to incur additonal costs of environmental regs.
From a recent Forbes article detailing refinery costs:
"Building a new refinery costs $5 billion and would take five years," says Oppenheimer oil analyst Fadel Gheit.
"Moreover, environmental regulations and inevitable lawsuits from groups opposing refineries popping up in their backyard mean oil companies risk sinking billions into breaking ground, only to never see a facility get up and running.
"An oil company would need to hire about 15 lawyers just to argue it won't break any environmental regulations," Gheit says.
Indeed, Arizona Clean Fuels, an organization that bills itself as committed to building newer and better refineries that burn gasoline more cleanly, has been through the wringer for a decade as it's tried to get a refinery up in the Yuma area. In April, the group finally got an air permit--the document needed to demonstrate it's complying with federal and state pollution laws--five years after it began the application process.
"And Arizona's regulations, if anything, are less prohibitive than most states," says Ian Calkins, a spokesman for Arizona Clean Fuels. "No one would even think about building in California, where regulations are even tougher."
In addition to common business challenges like financing and securing customer contracts, the group has spent the better part of the last ten years navigating the National Environmental Policy Act, which means showing why a refinery won't negatively affect everything from flowers and shrubs to endangered species of animals.
"It's been a long process--you need to know everything that's out there [regarding nature]," Calkins says. "We're trying to stay confident we'll eventually get it done, though we're also realistic."
Meanwhile, Gheit thinks it may take gasoline at $5 to $6 a gallon at U.S. pumps to spur a relaxation of the rules.
"The president brought up the idea of using abandoned military bases as refineries, but no one is jumping. The rules are just so stifling," he says.
http://www.forbes.com/business/2005/09/ ... eries.html
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Refinery gets permit
Group To Take Refinery Permit Battle to EPA as State issues permit
A grass-roots citizens group that opposes the proposed refinery vowed to take their fight to the Environmental Protection Agency, asking that agency to take over responsibility for enforcement and compliance.
[...]
Theresa Ulmer, spokeswoman for Yuma County Citizens for Clean Air, said: "We're going to fight this air permit."
http://www.refineryreform.org/News_YumaSun_041505.html
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"Nationwide, some 149 refineries currently operate, processing nearly 17 million barrels of crude a day, noted Bob Slaughter, president of the National Petrochemical and Refiners Association. In 1981, the nation was home to 325 refineries, handling 18.6 million barrels a day, Slaughter said. "
[...]
"In part, Rousseau argues, that's because refiners have tackled the easier expansion projects. Refiners also have been busy making changes to meet new lower-sulfur regulations. Investment also has been stifled by concerns over a shifting federal regulation known as New Source Review. During the Clinton administration, the U.S. Environmental Protection Agency began to insist that the law required refiners to make environmental upgrades when performing what the industry deemed routine maintenance. Prodded by industry, the Bush administration backpedaled on that interpretation. Now the issue is in court."
[...]
The partners [Arizona Clean Fuels] hope to begin construction in 2006 and begin refining crude by the end of the decade. Many in the industry remain dubious. After all, the Arizona Clean Fuels partners have been trying to obtain the necessary air permits since 1999.
http://www.chron.com/cs/CDA/ssistory.mp ... ic/2990832
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"It is unlikely that new refineries will be built in California. In fact, from 1985 to 1995, 10 California refineries closed, resulting in a 20 percent reduction in refining capacity. Further refinery closures are expected for small refineries with capacities of less than 50,000 barrels per day. The cost of complying with environmental regulations and low product prices will continue to make it difficult to continue operating older, less efficient refineries.
To comply with federal and state regulations, California refiners invested approximately $5.8 billion to upgrade their facilities to produce cleaner fuels, including reformulated gasoline and low-sulfur diesel fuel."
http://www.energy.ca.gov/oil/refineries.html
If you do a web search you will find numerous other lawsuits against oil refineries, so I don't think what Puplava mentioned is so far out of line...