From our Aug. 4 post "U.S. refiners see shakeout under climate change bill (TSO;VLO)":
...It would appear that the House climate bill was a disguised gasoline tax with the political advantages of being opaque and outsourcing the actual tax collection to mercenaries (i.e. carbon traders).You probably recognize the snarker as yours truly.
Oops, don't want to forget the grab-bag of goodies to every special interest that could get their snout in the trough, which of course will be recycled into campaign contributions.
A perfect bill!
Valero Energy's Bill Klesse says a carbon permit system will hasten the demise of America's oil refiners. It sure won't help anyPreviously:
William Klesse, chief executive of oil refiner Valero Energy, is riled up. "I think cap-and-trade is ludicrous," he says. "The whole bill is a hidden tax." The so-called climate bill wending its way through the Senate aims to create a cap-and-trade regime covering emissions of carbon dioxide and other greenhouse gases. If it passes in anything close to its current form, the bill would milk more carbon cash (payments to the government for the right to pollute) out of refiners than any other industry--somewhere between $30 billion and $110 billion a year. Valero, as America's biggest refiner (2.4 million barrels a day), would pay on the order of $7 billion a year.
The numbers are massive because the bill would hit refiners twice. First they would have to pay for allocations covering the carbon emissions from their factories (roughly 5% of total U.S. emissions). Then they would also be responsible for the tailpipe emissions from the combustion of all the automotive fuels they sell (roughly 40% of U.S. emissions). Klesse, 62, moans that politicians are "picking winners and losers" in figuring emissions allocations.
One problem with this analysis: It's motorists who will pay, as refiners simply tack carbon costs onto the price of gasoline. Valero Energy ( VLO) admits as much: Placards posted atop each pump at Valero's 5,800 branded gas stations feature the iconic illustration of a finger-pointing Uncle Sam and the words, "You will pay the price." The sign says that cap-and-trade "will cost you 77 cents or more a gallon."One thing Klesse does not need is yet another reason for people to buy less of his product....MORE