Coyote Blog

I have already written how Waxman-Markey, by the way in which it allocated free carbon permits, effectively demands almost all the reduced carbon dioxide over the first decade to come from drivers  (rather than electricity consumers or utilities).  Incredibly, even coal fired power plants get what amount to a free pass, while the increasingly efficient transportation sector must bear all the burdens.

Reuters has more on this phenomenon.   The article focuses mainly on "pain to refiners" but anyone with a modicum of economic sense will know that an industry with a single digit margin is not going to bear the cost of these changes - consumers of transportation fuels will through higher prices and more uncertain availability.

Ailing U.S. oil refiners could face a crippling period of contraction under a House-approved climate change bill, making the country more dependent on imported refined products.

The so-called cap-and-trade bill narrowly passed by the House of Representatives in June would limit greenhouse gas emissions by requiring polluters to acquire permits for the carbon dioxide they spew into the atmosphere.

To soften the blow, industry would initially be granted free permits covering 85 percent of emissions. But the refining industry managed to get only 2 percent of the allowances, leaving them vulnerable to encroaching foreign companies.

The bill is "going to put them out of business," said Phil Flynn, analyst at PFGBest Research in Chicago. "I think you're going to see refiners close down, especially in this environment we're in right now."

Already, a lot of our refined products are imported from foreign refineries, and my guess is that oil companies are going to be building Asian refineries like crazy.