U.S. Senate Committee on Environment & Public Works
U.S. Senate Committee on Environment & Public Works
Hearing Statements
Date:   05/13/2004
 
Statement of Senator Thomas R. Carper
Environmental Regulations in Oil Refining

Mr. Chairman - Over the years since Congress enacted the Clean Air Act, we have made significant strides in protecting human health and the environment. Statistics show that air quality has improved significantly, even as our economy has expanded at an unprecedented pace.

Recent clean air regulations affecting passenger cars, trucks, and buses are an essential part of this success story, and promise even further progress as they are fully implemented in coming years. The bottom line is that we can expect producers to make gasoline that is clean-burning, to operate refineries without emitting tons of harmful pollution, and to be able to do so without sending the price of gasoline skyrocketing.

These regulations improve the quality of the air thousands breathe, result in fewer premature deaths, and provide billions of dollars in public health benefits. For example:

· The Tier 2/Gasoline Sulfur Rule will prevent 4,300 premature deaths and result in $25 billion in public health benefits each year;

· The Heavy Duty Diesel Rule will result in 8,300 fewer premature deaths and $51 billion in public health benefits each year;

· The Off-Road Diesel Engine Rule announced yesterday will result in 12,000 fewer premature deaths and 15,000 fewer heart attacks each year, resulting in $80 billion in public health benefits each year.

Regulating emissions from industrial facilities such as refineries are an important part of this success story. In Delaware, the story of the Motiva refinery provides an example of hard work that has yielded progress and results. Once the largest emitter of sulfur dioxide in the country, Motiva has agreed to install scrubbers significantly reducing their emissions. It is important to note that this regional air quality victory did not detract from Motiva’s attractiveness as an acquisition target – last week Motiva was purchased by Premcor, Inc.

In general, the overall financial success of oil companies does not seem to be negatively impacted by environmental regulations. In fact, profits for many companies have grown as gasoline prices have climbed. According to Bloomberg, current margins on processing crude oil into gasoline are 69 percent above the 10-year average and the second- widest since at least 1990.

The statements from today’s witnesses largely focus on oil and gasoline supplies – under the current circumstances, this is not only an economic issue, but a critical national security issue as well. Mr. Slaughter’s testimony states that an important component of recent gas price increases is the strong demand for gasoline. Today, passenger cars and light trucks account for approximately 40 percent of the oil consumed by Americans. If we are looking for the long-term fix that several of the witnesses advocate, shouldn’t we be trying to also decrease demand, rather than just increase supply? Under the circumstances, I believe that it makes sense to pursue conservation and energy efficiency initiatives. For example, by raising the fuel efficiency of American-made cars, trucks, and SUVs, we could significantly decrease the amount of foreign oil that we import. And, we might be able to have a faster impact by including conservation efforts in an overall policy mix, rather than just relying on increased production.

Another important aspect of supply and demand involves alternative fuels. I believe that we should be devoting more research and development resources to developing fuels that can reduce our reliance on imported petroleum. Yesterday, the Senate approved some of the tax provisions of the long-delayed energy bill. Included was support for the production and use of biodiesel and ethanol. Last week, the Senate failed to adopt a Renewable Fuels Standard when it was offered. The point here is that there are several things we can do, besides increasing production of traditional gasoline and diesel.

With past progress, the promise of even better air quality in our future, tremendous public health benefits, and little financial downside for companies, there is no reason to take backward steps. Environmental policy must be based on, and adhere to, a long-term vision dedicated to protecting public health and the environment. Above all, environmental policy should not be geared to the ebb and flow of short-term events – such as the vagaries of gasoline pump prices.

Mr. Chairman, thank you for