Thursday AM December 3rd, 2009
by: Ed Mayberry, December 3, 2009 5:12:00 am
Discussions at the Gulf Publishing Industry Forecast Forum focus on issues faced by the energy industry, with advice on how to plan for 2010. The refining industry sees upcoming cap and trade regulation as a direct threat. Valero's Kay Bowers says the energy industry has been watching the cap and trade debate unfold in Europe.
"Well, we're still continuing to evaluate. I mean, you mention Europe. I think that's a good comparison to have and it's certainly one that I'm gonna talk on Thursday at the forum. In Europe, the cap and trade that's there is only on the direct emissions from the refineries. Valero has 15 refineries across the U.S., and the industrial facility is much like any other industrial facility—it emits CO², but so do our products when they're used in vehicles. And the way the cap and trade is proposed currently has the refiner being responsible not only for the direct emissions from the facilities, but also from the products."
Bowers says implementing cap and trade on the refining industry will mean cost pass-throughs for the consumer.
"The estimates that we're putting in--even about a $20 carbon credit, which is a pretty low price from a trading standpoint, for Valero alone would be about $6.5 billion a year that we would be incurring in expense. Likely a large portion that we passed on through to the consumer, so there's a lot of debate on how much is the pass-through, and clearly how it gets set up and how it gets administered, and whether or not imports are going to have the same issues as we have. All will kind of work out in the mix as far as how much gets passed through to the customer."
The Gulf Publishing Industry Forecast Forum for downstream and upstream takes place today at the Omni.