Energy Execs Blame EPA for Role in Tight Supply

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Wednesday September 20 9:17 PM ET Energy Execs Blame EPA for Role in Tight Supply

By Julie Vorman

WASHINGTON (Reuters) - U.S. energy executives and some Republican lawmakers railed against the Environmental Protection Agency on Wednesday for regulations that make it too difficult to build new refineries, electricity plants or fuel storage tanks at a time when the nation needs more energy.

Soaring prices for fuel oil, natural gas and electricity have already shut down some mining firms and threaten to cause power outages at other businesses, said Rep. Dan Burton, chairman of the House Government Reform committee.

``Windmills and solar power aren't going to solve the problem,'' Burton said.

``It seems to me we ought to revisit some of these regulations so we can get more production of the fuels that are needed by the American consumer,'' he added.

The Republican-led panel heard testimony from industry executives who criticized federal environmental regulations for blocking or slowing plans to expand facilities.

But any move to relax environmental rules are certain to meet with opposition from many Democrats and green groups. They contend the best answer to tight energy supplies are incentives to encourage conservation and efficiency, requiring more fuel-efficient vehicles and more federal research.

Power Plant Delayed By 1 Person

Calpine Corp. (NYSE:CPN - news) said it aims to build eight new power plants this year and next to help ease electricity problems which caused brown-outs throughout California this summer.

``Unfortunately, we are frustrated in attempting to build these new, highly-efficient and clean power plants because current permitting procedures allow for the imposition of 'automatic stays' on the construction of new power plants, even when these stays are based on inaccurate, frivolous or unsubstantiated claims,'' said Calpine vice president Curt Hildebrand.

In one instance, a lone individual's complaint under the EPA's Clean Air Act held up Calpine's construction of a natural gas-fueled power plant in Sutter County, California. The objection, which was eventually thrown out by regulators, delayed the project by six months and added ``millions of dollars'' in costs, Hildebrand said.

An estimated 3 percent annual increase in U.S. electricity demand means about 22,500 megawatts of new power need to be added every year, he said.

John Santa, owner of Santa Energy of Bridgeport, Conn. which sells 4 million barrels of products annually, blamed EPA regulations for adding unnecessary expenses to storage.

Since 1993, the government began requiring petroleum distributors to separate diesel into two tanks, one for heating oil and one for motor fuel. That means separate tanks, pumps and trucks as well, adding to the cost, Santa said.

``Threats of pollution difficulties, OSHA compliance issues, pressure from developers -- all of these add up to a very unappealing prospect for a terminal company,'' he said.

NO NEW REFINERIES?

Oil giant Exxon Mobil Corp. (NYSE:XOM - news) urged lawmakers to balance environmental concerns against energy supplies.

U.S. refineries are now straining at more than 95 percent of capacity to churn out enough gasoline and heating oil, but no new plants have been built in a generation.

Currently, there are 155 U.S. refineries with a combined capacity of 16.3 million barrels per day.

``The federal government needs to employ sound science coupled with rigorous cost-benefit analysis and proceed at a pace that allows investments to be made in an orderly fashion that does not further threaten the supply of fuels to U.S. consumers,'' said Steve Simon, president of Exxon Mobil's refining division.

Refiners also complained that the EPA's plans to tighten rules for sulfur in diesel fuel and to phase out gasoline additive MTBE are costly and too strict.

More than $7 billion has already been spent by refiners during the past decade to comply with environmental regulations, said Bob Slaughter, general counsel of the National Petroleum and Refiners Association.

Refiners must provide nine types of gasoline to address varying state and federal rules for clean air, he said.

``EPA is setting fuel and vehicle emission requirements that simply may not be feasible, or may only be achieved at the risk of much tighter energy supplies and greater price volatility,'' he added.

Some companies have already been stung by high energy costs.

A Montana copper mining firm said it was forced to shut down operations at the end of June after electricity prices rocketed from $35 a megawatt to $650 per megawatt.

``If we don't come up with some solutions soon, the basic industries of the West are in for additional shutdowns,'' said Ray Tilman, a Montana Resources official.

http://dailynews.yahoo.com/h/nm/20000920/pl/energy_oil_dc_3.html



-- Martin Thompson (mthom1927@aol.com), September 20, 2000

Answers

No new refineries in the last 30 years? -- that's utterly ridiculous. It's little wonder that we've got a big heating oil crisis coming up.

-- RogerT (rogerT@c-zone.net), September 20, 2000.

Can anybody tell me what Clinton's engergy policy has been over the past eight years? I haven't the foggest idea.

-- Wayward (wayward@webtv.net), September 20, 2000.

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