Vacationing White House and EPA officials will get a taste of their own medicine this summer when East Coast gas prices spike thanks in part to their restrictive policies.
Analysts are predicting a record spike in pump prices starting in June, with 50% of East Coast refinery capacity now shut down due in part to costly EPA regulations. And there’s no quick way to resupply that lost gas via refineries in Louisiana and Texas, thanks to EPA restrictions on new pipelines.
Instead of blaming Wall Street “speculators” for the gas crisis, President Obama needs to call off his EPA regulators and make it easier for East Coast gas refiners to upgrade plants or build new ones, as well as for Gulf Coast suppliers to pipe in gas to the fuel-starved region.
The untold story behind soaring pump prices is that major U.S. refineries are going out of business and creating regional shortages. In just the past six months, three refineries — including two owned by Sunoco Inc. — supplying about half the gasoline, diesel and jet fuel to the East Coast have closed. They say they simply cannot make money anymore.
Philadelphia-based Sunoco’s refinery business in the Northeast has lost almost $1 billion over three years as demand for gas fell and the cost of foreign crude soared. But over the same period, it had to shell out “significant expenditures for environmental projects and compliance activities” to satisfy onerous EPA mandates, according to the company’s latest 10-K report.
In fact, it’s spent more than $1.3 billion just to comply with stricter EPA rules, which carry stiff fines or penalties for violations. Sunoco fretted that these regulatory costs would grow exponentially under the Obama administration, which has hit some refineries with fines.
“During 2009, the EPA indicated that it intends to regulate carbon dioxide emissions, (which) could result in increases in costs to operate and maintain the company’s facilities, as well as capital outlays for new emission-control equipment at these facilities,” the company warned in its 2011 report filed with the SEC.
“Compliance with current and future environmental laws and regulations likely will require us to make significant expenditures, increasing the overall cost of operating our businesses, including capital costs to construct, maintain and upgrade equipment and facilities,” it added. “To the extent these expenditures are not ultimately reflected in the prices of our products or services, our operating results would be adversely affected.”