U.S. oil refineries could slash production by as much as 25 percent and the nation’s reliance on foreign oil could double in the next 20 years if the House version of the climate bill becomes law, according to the American Petroleum Institute.
The so-called cap-and-trade bill narrowly passed by the House of Representatives in June. Refining production could drop by as much as 4.4 million barrels per day by 2030 to 12 million bpd, the API said, quoting a study it commissioned by EnSys Energy.
Imported fuel could account for up to 19.4 percent of consumption by 2030 under the climate law, the study said, up from a projected 9.6 percent if the law were not in place. Investment in U.S. refineries could drop by as much as $90 billion by 2030, a decline of 88 percent.
The House bill is designed to reduce greenhouse gas emissions by 17 percent from 2005 levels by 2020, and requires polluters to acquire permits for the carbon dioxide they emit into the atmosphere. Under this legislation, refiners are responsible not only for the 4 percent of emissions released from refineries when processing crude oil, but also the gases emitted from use of fuels produced such as gasoline and heating oil.
Industry would initially be granted free permits covering 85 percent of emissions. But the refining industry was allocated only 2 percent of the allowances, leaving them vulnerable to competition from foreign refiners not subject to the same costs.
Analysts have said the bill could damage refiners, particularly small, independent manufacturers already reeling from weak demand and improving fuel efficiency.
Oil Barrel
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