Obama auto efficiency move a blow to U.S. refiners

NEW YORK (Reuters) – The Obama administration’s ambitious plan to raise auto efficiency standards would cut deeply into notoriously voracious U.S. gasoline demand, dealing another blow to a refining sector hard hit by recession and bracing for looming climate regulation.

The White House said Tuesday that President Barack Obama will announce the most aggressive proposal for increasing auto fuel economy standards ever, requiring an average efficiency of 35.5 miles per gallon by 2016.

The measure would cut some 1.8 billion barrels of oil consumption by 2016, the White House said, representing a big drop in the gasoline demand outlook that could hit refiner profitability and force companies to review costly plans to increase production capacity.

“If you’re a refiner right now, this is a gut-check,” said Kevin Book, analyst at ClearView Energy Partners in Washington. “These are enormous changes.”

Book said he expects the proposal would cut some 2.3 billion gallons per year from U.S. gasoline demand in 2016, a 1.6 percent drop.

Reuters