Thursday, August 23, 2007

What Happens in Pascagoula Doesn’t Stay in Pascagoula

Last Thursday, a fire at the aging Chevron refinery in Pascagoula, Mississippi, temporarily sidelined one of the 10 largest oil refineries in America. Although Chevron says most of the refinery is undamaged, it has not restarted yet.

I knew this because my oldest stepchild, John, is working on yet another expansion of the Chevron facility. John is an LSU grad in Construction Management so he, for example, can look at blueprints and calculate the volume of concrete needed. The firm’s employees were evacuated when the fire broke out. He’s OK but his truck smells like burning chemicals inside.

The Pascagoula refinery celebrated its fortieth anniversary in 2003 so many of the pipes carrying crude are old. It makes gasoline and jet fuel, among other products, from crude oil. That transformation requires heat at approximately 1400 degrees F. As news of the fire spread, the price of oil jumped $2 per barrel to $71 on commodities exchanges.

Hurricane Katrina showed how shutting only a few refineries can make a large impact on prices American consumers pay for gasoline and heating oil. As the refineries and oil platforms near the Gulf of Mexico struggled to recover after Katrina, American politicians asked if we had enough oil refining capacity.

Because of stricter environmental standards, there has not been a new refinery built in the United States since 1976, while the number of oil refineries shrank dramatically from 301 to 149. Refineries which still exist have to try to run near full capacity to keep up with American demand. Some areas require special gasoline formulations to reduce auto emissions, which drives up prices everywhere.

Self-serving statements from the National Petroleum Refineries Association say that American oil refinery capacity has increased. “With the amount of new capacity U.S. refiners have added at existing facilities since 1994, it’s as though the industry has been building a new, world class refinery each year,” said Charles Drevna, executive vice president of the association. He says refining capacity has increased by 177,000 barrels per day.

If it is true, should not the price of gasoline and heating oil be lower? The U.S. Department of Energy tracks oil refinery output. While the amount of gasoline supplied by American refineries is about 285 million barrels per month, the amount of refinery capacity devoted to gasoline production has fallen by 10 percent from 1983. The amount of fuel oil produced by American oil refineries has fallen by five percent since the record high production of about 135 million barrels per month in 2001.

As we witnessed after Hurricane Katrina and the Pascagoula refinery fire, American refineries are fewer in number so a disaster at even one drives up crude oil prices. Even tiny swings in the price of crude oil increase the cost of finished products consumers buy. Expect candidates for President of the United States from both major parties to argue for more oil refineries or at least repeal of the laws of supply and demand.

Tuesday, August 14, 2007

Wearing Politics on Your Sleeve

Without even thinking about it Monday, I pulled on one of my Mark Green for Governor campaign tee shirt to go to make a deposit at the credit union branch down the street in the Hill Farms state office building. Hill Farms is also the headquarters of the Wisconsin Department of Transportation.

One of the items I was depositing at the credit union was my Wisconsin income tax refund. Let’s reflect on how incompetent the Wisconsin bureaucracy is that I am getting my 2006 income tax refund in the middle of August 2007. However, maybe the slowness was deliberate. Slowness in issuing refunds might be a decision by political appointees to make the case that people who file paper returns should have to pay a higher fee: a tax on paying taxes. Under Wisconsin’s income tax laws, I could not file electronically in 2006 because I was a taxpayer in another state in 2005. Those who filed electronically got their refunds long ago.

When I needed to title my car at Hill Farms during the gubernatorial campaign, I waited about two hours until my number was called. Others were waiting just as long and were still waiting when I was done. It was all I could do not to go to my car and start handing out Green campaign literature to people who were grousing about how long they were waiting. Of course, it is not permitted to campaign on state property. Make Wisconsin great again, indeed.

But I digress. Everyone turned to look at my shirt; you could almost hear the vertebrae cracking, but no one commented. Contrast that experience to when I wear a Mark Green shirt to private businesses such as the grocery store. People will make unsolicited comments such as “I voted for him.” Because hardly anyone has seen a McCain sticker on a car, I often get comments about that, too. Navy veterans comment about the Navy Dad sticker.

Sometimes I go to the credit union near downtown at the corner of West Washington Avenue and Regent Street, where I often run into people I know. On one of those visits in early 2007, I ran across Chris Green, Mark’s brother, who works in Madison. Ironically, that very day I had eliminated Chris Green from my cell phone’s speed dial. I gave Mark Green 10 to 15 days in 2006, which is why I have a couple of Mark Green for Governor tee shirts.

Because it is Madison, I see a fair number of shirts for Democratic candidates for President and bearing anti-Bush slogans. Mark Green for Governor is politically incorrect.