Gasoline prices may be high in Washington, but at least it’s there when we turn on the pump. Folks who depend on Gulf Coast refineries have not been so lucky lately. In Georgia, for example, schools have been closed for two days in an effort to conserve school bus diesel.
So you have to wonder what’s up with a Republican plan to encourage more refinery construction in Washington. Among their ideas are streamlined permitting, with local jurisdictions denied a veto of state-level permitting decisions, and assured access to water and competitive electricity rates. But Washington is already an exporter of gasoline and diesel. About one-third of the output from the five Puget Sound-area refineries is shipped out of the state, notably to Oregon, which has no refineries. For a state devoid of any crude oil production whatsoever, Washington is remarkably rich in refinery capacity thanks to its proximity to oilfields in Alaska and Canada.
Also, the Spokane area gets a significant share of its gasoline and diesel supplies from three refineries in Billings, Mont.
Sadly, abundant supply does not translate into low prices. A gallon of gas costs as much outside the refinery gate as it does hundreds of miles away. Commodity traders, not odometers, determine prices. As distant as Washington may be from the damage done by hurricanes Katrina and Rita, refinery disruptions in Texas and Louisiana still take their toll.
Of course, Washington piles on one of the nation’s highest gasoline taxes, but one of the lessons from those storms should be how important it is to strengthen infrastructure — with the help of those revenues — before floods or earthquakes can work harm.
Hurricane damage has amplified calls for more refining capacity in the U.S., where no new refinery has been built in 30 years. If fact, many have closed. But that does not mean the nation has lost capacity. Washington refineries process about twice the crude they did 25 years ago thanks to improvements in technology and changes in product mix.
What Washington lacks, and the Gulf Coast has in abundance, is transportation capacity. A complex web of pipelines extends from Texas and Louisiana up the Mississippi River to the Midwest, and along the Atlantic Coast states to the Northeast. By comparison, Washington’s refineries are darn near stranded. Only one pipeline serves the Puget Sound refineries, and it terminates in Oregon. To reach Spokane, or other markets in Idaho and Utah, gasoline and diesel from those plants must be barged up the Columbia River from Portland to the Tri-Cities.
Even if Washington could refine more oil, transportation might be problematic.
Meanwhile, in response to instances of exorbitant gasoline prices, members of Congress and several governors are calling for investigations into price-gouging by the industry. Not to be cynical, but good luck. It may be easy to isolate dealers who have taken advantage of shortages caused by Katrina and Rita, but making a case against any major oil company would be long shot at best. With global demand for oil soaring, and producers struggling to boost production, higher prices are going to be a fact of life.
Washington Republicans should drop the refinery idea and concentrate on some of the better elements of the energy plan they released last week, notably those that will encourage upgrades of the state’s transmission grid, and adoption of smart energy controls by homeowners and businesses. Ditto for suggested sales and use tax abatements for conversion of conventional automobile engines that will allow them to burn alternative fuels like biodiesel.
Make the use of these fuels and technologies more economical for consumers, and producers will figure out a way to meet demand.
One other worthwhile component of the Republican plan: a cap on state Public Utilities tax revenues, at least for one year. Those taxes, now a fixed percent of electricity, natural gas and other utility bills in 2004 generated $292.8 million in revenue for the state. That was an 8.5 percent jump from 2003. With major increases in natural gas bills likely this winter, and the state suddenly facing a revenue surplus, a cap would provide some timely relief.
The Republicans want their agenda passed in a one-day special session. For her part, Democratic Gov. Christine Gregoire has suggested joint legislative hearings next month to examine energy matters, including those related to alternative fuels.
Whatever plans emerge from these discussions, conservation should be the top priority. Nothing is cheaper in the long run, and the cost savings stay in-state. The marketplace, by the way, is encouraging conservation with all its might.