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Refining Bill Passes US House (210-208)

Posted by Glenn on October 8, 2005 - 10:21am in The Oil Drum: Local

The US House of Representatives just passed a new bill to increase refining capacity by a narrow vote, largely along partisan lines with 13 Republican defectors siding against the bill. While Democrats voted against this bill on the basis of the loosening environmental restrictions, I was against the bill because it only makes it easier for oil consumption to continue to run away unchecked. I see the limited refining capacity as a nice way to tighten supply to end users, thus raising prices to levels that would destroy demand ahead of the actual peak in crude supplies.

This is the way economics are supposed to work. No one wanted to invest in additional refining capacity, because they did not know where the extra crude would come from. The mere fact that Congress has to intervene to stimulate construction of refining capacity should raise eyebrows among free market conservatives, but the Republican leadership, including recently indicted Rep. Tom DeLay cornered Rep Roscoe Bartlett and somehow convinced him to vote for the bill, effectively providing the decisive vote.

Then in a strange twist as the House Recessed, House Speaker Dennis Hastert designated Bartlett "to act as Speaker pro tempore to sign enrolled bills and joint resolutions through October 17, 2005".

So right now, the only member of Congress that has has publicly spoken about peak oil is effectively the Speaker of the House (albeit a recessed House) for the next 10 days. I'm really trying not to overthink this one, but perhaps Bartlett has something up his sleeve.

More closer to home, The NY Times has an interesting article about the New Jersey refining industry

Refining Bill Passes US House (210-208)

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4 comments

jkl on October 9, 2005 - 12:55am Permalink | Comments top
No one wanted to invest in additional refining capacity, because they did not know where the extra crude would come from. The mere fact that Congress has to intervene to stimulate construction of refining capacity should raise eyebrows among free market conservatives

Not so.  Check your facts.  

Throughout the 90s, oil companies closed some 50 refineries.  They weren't worried about the crude supply; crude was plentiful, witness its price.  They were responding to the decreased demand for gasoline in the American economy that resulted from the imposition of the CAFE car-mileage standards.  The overcapacity in refining led, no surprise, to thin margins and unprofitability.  

As for Congress needing to intervene, puh-lease!  Katrina and Rita are an excuse for more drill-em 'n' dig-em boondoggle giveaways.  No one pretends this is intelligent policy, except those trying to pass the bill.  If George W. Oil weren't guaranteed to sign it, it wouldn't be happening.  This is just political opportunism by the wrong-wing Congress, nothing more.  

Glenn on October 9, 2005 - 1:41am Permalink | Parent | Comments top
I think we are saying the same things, just from different perspectives/time periods. Not building/shutting refining capacity in the 1990s was because of low gas prices driving down margins, CAFE being IMHO a minor part, over production and the Asian financial crisis were the bigger reasons. What I'm talking about is the fact that no oil companies are talking about re-opening or building new refineries despite the incentives - the margins are pretty good now. The question is where will the supply be in 3-5 years when new construction would come online? I think the smart money knows that there will be no excess crude supply then. In this case I think the market is working the way it should, not making large investments in stuff we won't need in a post Peak oil world.
livetrii on October 9, 2005 - 12:56pm Permalink | Comments top
I watched part of the floor debate on C-SPAN, & heard a reference to building new refineries to process coal. Does anyone have verification of this, or can point me to a copy of the bill?
Yankee on October 10, 2005 - 3:31pm Permalink | Parent | Comments top
You may be referring to S. 957, "Clean Coal Power Initiative Act of 2005". Go to http://thomas.loc.gov and type in "coal"--it should be the first thing to come up. I am not sure whether this bill was ever passed, though.

Refining Bill Passes US House (210-208)

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4 comments