It’s a general rule of thumb that any law the oil lobby hates is probably good for the American people, and that’s precisely the case with the finalized low-sulfur gasoline rules the Environmental Protection Agency (EPA) rolled out Monday.
The standards, which will be phased in starting in 2017, will reduce smog-causing emissions from cars and trucks, and would avert up to 2,400 premature deaths by 2030 (with a cost of about a penny per gallon), the EPA said. Low sulfur gas of just 10 parts per million would also avoid 1.8 million lost school and work days because of respiratory ailments.
But the American Petroleum Institute, Big Oil’s chief public voice, is hopping mad about the $10 billion in capital costs and $2.4 billion annual costs it says it will have to bear. “This rule’s biggest impact is to increase the cost of delivering energy to Americans, making it a threat to consumers, jobs and the economy,” says API’s Bob Greco. “But it will provide negligible, if any, environmental benefits. In fact, air quality would continue to improve with the existing standard and without additional costs.”
It’s almost impossible to feel sympathy for oil companies, given their historical record of windfall profits. And $10 billion isn’t a whole lot for an industry that has routinely taken in more than $50 billion in profit in a single quarter, but there have been some hard times lately. Exxon Mobil reported its worst fourth-quarter earnings in four years at the end of 2013, down 27 percent, and Royal Dutch Shell was down 48 percent.
It gets worse. This is from a new report by Citizens for Tax Justice:
Oil companies that paid no taxes or negative taxes in at least one of the years between 2008 and 2012 include Murphy Oil, Exxon Mobil, Occidental Petroleum, Devon Energy and HollyFrontier. Exxon Mobil actually got money out of the government – raking in more than $25 billion in one of those years while actually getting $954 million out of the taxpayers for a tax rate of negative 38 percent. Overall, the oil, gas and pipelines industry paid taxes at an average rate of 14.4 percent in the five years measured making profits of more than $223 billion and paying taxes of only $32 million. During that same time period oil, gas and pipeline companies received $45 billion in subsidies.
API actually claimed the new rules would increase CO2 emissions at refineries, because of energy-intensive equipment that would have to be installed. The industry is quite worked up, which is a contrast to the auto industry, which is welcoming the rules. Why? Because cleaner gasoline will make it easier for automakers to meet the tough federal fuel economy and greenhouse emission goals for 2025. “Our cleaner cars will need cleaner fuels to fully achieve and optimize the improvements we are being asked to make,” said Wade Newton of the Alliance of Automobile Manufacturers.
“We are pleased that EPA recognizes that cleaner cars need cleaner fuels and finalized a rule with significantly reduced sulfur levels and in line with other developed countries,” Newton added. What he means is that vehicles around the world can now be built to use the same clean fuel, which aids in the industry’s efforts to build “world cars.”
Yes, there's conflict here. As Bloomberg describes it, the new regs "were the subject of years of conflict between the automakers, which support cleaner fuels that lower their costs, and the oil industry, which will bear billions of dollars in extra costs." But you don't have to worry about all that. Unless you’re the oil industry, low-sulfur fuel looks like a win-win.
A related issue is a pending Supreme Court decision on how far the Obama administration can go to regulate greenhouse gases, given the legally sanctioned concept that carbon dioxide is a pollutant. If the Supremes limit the administration's ability to make policy under the Clean Air Act, it would be a blow to just about everything they've accomplished so far. Here's some video on that drama:
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