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Tuesday, November 24, 2009

Bad economics for Valero, Sunoco makes for cleaner air

If you had to pick organizations that have done more to make the Philadelphia region a cleaner, more sustainable place this year, who would you choose?

Gamesa, for building wind turbines in Bucks County?

The Delaware Riverkeeper Network, for suing to stop the deepening of the Delaware River?

Why not think outside the reusable tote bag and pick Valero Energy and Sunoco, who are shutting down refineries in Delaware City, Del., and West Deptford, N.J.

After all, think of the air pollution that will be avoided once the cat crackers go dark. I’ll understand if politicians don’t line up behind those choices, because closing the refineries means 950 people are losing their good-paying jobs. (I think those same politicians call them “family-sustaining” jobs.)

But face it, these two oil companies probably just did more in the space of six weeks to clean the air in the region than all the solar arrays mounted to school roofs this year.

Sunoco and Valero didn’t do this out of the goodness of their hearts. No, the companies are shuttering their refineries because our insatiable demand for gasoline, heating oil and other fuels apparently had an upper limit.

We, meaning the United States, reached it back in 2007 - the year before the per-barrel price spiked to its all-time high of $147. No one liked paying over $4 for a gallon of gas, and the price of diesel was even worse for shippers and their bottom lines.

How about that? One tenet of economics still works. Jack up the price of anything high enough and we will tend to use less of it.

Oh, another economics chestnut still crackles on an open fire too. Any company that loses too much money producing something must either change its ways to make it profitable or get out of that business.

Sunoco and Valero chose the second path. They just don’t see enough future demand to make it profitable for them to keep those refineries running.

This should make us happy as a country, should it not? Far from being worried that “no new refinery has been built in the United States” in more than 30 years, we now don’t need the ones we’ve got.

But face it, we’re not giving up energy. We’ll need as much of it, if not more, to run this country once the expansion kicks in. After all, it takes a lot of energy to run the server farms that enable us to Google a list of “clean-tech” companies that are hiring. The transition to “cleaner” energy will take much longer than the weeks needed to shutter a refinery.

Will the jobs being created in the “green” economy really pay as well as refinery work? I know about 950 people who will want to know the answer to that question.

Quotable

There are a lot of people who think of going to the mall on ‘Black Friday’ as dental surgery — painful and awful. We’ll be a good alternative.

- Doug Rose, vice president of programming and marketing for QVC, telling the Associated Press about the West Chester cable shopping network’s plan to have program host Dave James stay awake for 28 hours of telethon-like coverage.
Posted by Mike Armstrong @ 2:05 AM  Permalink | File Under: Energy, Utilities | 3 comments
Comments   
  • 0 like this / 0 don't   •   Posted 11:00 AM, 11/24/2009
    Yea, hot cancer spots might be shutting down, but what about the too cheap to meter, better than solar energy nuclear power plants? If only we could get them to like, you know, stop accidently leaking RADIOACTIVE GASES. Like the event at Three Mile Island this weekl. Yes, despite all of the good will now being generated by the market induced environmentalism of local oil companies, local Nuclear Plant operators have just pulled a Homer Simpson by falling asleep on the switch. They have wiped out years of forgetting about the worst nuclear meltdown in American history by showing an inability to keep on top of the small details that make such a big difference. Like keeping RADIOACTIVE MATERIAL in a contained, safe manner. And while this may generate a lot of economic activity with consultants hired to find out what went wrong and providing failsafe recommendations so it never happens again, I am sure I know 6 million people who would rather see that dump permanently decommissioned, rather than to LEAK RADIOACTIVE MATERIAL FOR A THIRD TIME IN THEIR LIVES.
    — Fernando08
  • 0 like this / 0 don't   •   Posted 10:28 AM, 11/26/2009
    the only market that these companys are going to have are in storage, and supply. If i were invested in the refining bizz i would switch my shares to the piplines considering that all refining will probably go overseas.Plus considering that these piplines run through areas that are enviromentally safe these companys like Sunoco and Valero will be less bothered by EPA rules NO REFINING= less fines more money on a still stored and supplied dependant resource. It's a win win if chose to do so.
    — timmy12
  • 0 like this / 0 don't   •   Posted 10:29 AM, 11/26/2009
    the only market that these companys are going to have are in storage, and supply. If i were invested in the refining bizz i would switch my shares to the piplines considering that all refining will probably go overseas.Plus considering that these piplines run through areas that are enviromentally safe these companys like Sunoco and Valero will be less bothered by EPA rules NO REFINING= less fines more money on a still stored and supplied dependant resource. It's a win win if chose to do so. THE CONTANGO MARKET
    — timmy12


3 comments
About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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