New Oil Industry Report on Wrong Track

The only surprise about the new report released today by the Western States Petroleum Association is what it doesn’t come right out and say: that the oil industry is pretty sure that those of us who believe climate change is one of the biggest issues facing California today are actually conspiring to put them out of business.

The report, “Understanding the Impact of AB 32,” is based on public data but was processed through the Boston Consulting Group’s proprietary modeling using the industry’s assumptions about the future.  It reads less like an actual analysis of the potential impacts of California’s landmark climate law, and more like a laundry list of “woe is me” excuses for the oil refinery industry – not incidentally, the industry that paid for the report – claims that California’s innovative clean fuels policies will ruin their businesses.

The biggest problem with the report is its assumption that no one – none of California’s myriad economic sectors – will make changes aimed at reducing our dependence on oil, or at curbing dangerous greenhouse gas emissions. For example, even as refineries face falling demand for gasoline, in California and across the nation, this report implicitly assumes that refineries won’t adopt more efficient technologies, or change their volume of production in response to reduced demand.

In fact, the idea that California’s refineries would fail to do a brisk business in California, even under AB 32, is a load of hooey. California still represents one of the biggest and most lucrative markets for gasoline. And yet a significant amount of the fuel produced in California is currently shipped out of state, which certainly provides a substantial cushion for any reduction in local demand.

What California’s refineries should be focused on is how to become a leader in this new clean fuel economy. Low carbon fuel is going to be the fuel of the future, in high demand not only in the U.S. but abroad.  By focusing now on making the changes needed to produce this kind of fuel, California’s refineries could get a jump start on this growing market – instead of bemoaning the slowing demand for their existing, outdated fuels.

There’s a reason they’re called fossil fuels, after all.


By Tim O’Connor and Jamie Fine Ph.D.


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One Comment

  1. Posted June 20, 2012 at 1:47 pm | Permalink

    Tim O’Conner and Jamie Fine of the Environmental Defense Fund feel WSPA’s report on the market impacts from climate change policies is on the wrong track because it points out a number of potential problems in the not-so-distant future.

    WSPA and Brad VanTassel of the Boston Consulting Group briefed EDF and other major environmental groups on the report Tuesday and invited them to provide us feedback on where they thought the report was in error or deficient.

    We also emphasized we want to start a conversation, not a shouting match, about how California can meet its climate change objections with policies that are feasible and sustainable. As the BCG study makes clear, the current policies – especially the current Low Carbon Fuel Standard, are neither.

    We understand not everyone will agree with the findings of the study. But we encourage anyone and everyone who is interested in this issue to look at the report and judge for themselves whether it’s accurate and reasonable. If they don’t think so, tell us why. That’s why we created the CA Fuel Facts website as a place to review the report and supporting material and to share with us and others your views about it.

    As we said in our letter to Governor Brown, WSPA and its member companies stand prepared and committed to work with the state’s policymakers to chart a new and better path for achieving California’s emission reduction goals.

    Catherine Reheis-Boyd
    Western States Petroleum Association