CA: Boxer adds muscle to fight over refinery

Bakersfield Californian ^ | 4/9/04 | Erin Waldner

[NormsRevenge]

Demands that the Shell Bakersfield Refinery remain open intensified Friday, as Sen. Barbara Boxer joined a chorus of calls to the Federal Trade Commission and California Attorney General Bill Lockyer to prevent the closure. "The plant must remain open until a buyer is found and a sale is completed. Otherwise, consumers will pay the prices," Boxer wrote in a letter to FTC Chairman Timothy Muris.

Boxer's letter caps a week that has seen a wide array of critics of the proposed closure emerge. Also this week, the FTC announced it is evaluating the situation, and the state Attorney General's office -- albeit falling short of a demand that the refinery not close -- said it will do everything in its power to keep prices under control.

Industry experts have said the refinery's closure will likely result in higher gasoline and diesel prices on the West Coast, as well as the loss of 250 full-time jobs and an additional 150 contractors.

A chink in Shell's insistence that it will demolish the plant also appeared this week. Although Shell insisted no buyer would want the plant when it announced in November it would shutter it and tear it down, Lynn Elsenhans, president of Shell Oil Products U.S., said Tuesday that it is for sale.

"Since so many people have questioned if the refinery is for sale, I want to make it clear that it is, and to state unequivocally that we are willing to sit down with any credible buyers to discuss such a deal," he said in a statement.

"I urge you to do more than merely welcome discussions," Boxer wrote Elsenhans on Friday. "I urge you to actively seek a purchaser for the Bakersfield refinery."

The logical buyer for the Bakersfield refinery would be ChevronTexaco, which runs the adjacent Kern River oil field. The refinery grew up sipping Kern River heavy crude, and was owned over the years by successive companies with major holdings in Kern River.

The last of those was Texaco, which merged its West Coast refining and marketing operations with Shell's in the late 1990s.

When Texaco was bought by Chevron in 2001, the state Attorney General's office forced the merged company to sell off its interests in its jointly held refineries, including the Bakersfield plant.

That means ChevronTexaco can't buy the refinery unless a modification of the deal it negotiated with the attorney general is reached.

After the merger, ChevronTexaco also ended up with virtually the entire Kern River oil field.

Asked Friday, ChevronTexaco spokesman Ed Spaulding said the company already owns two large California refineries, one in Los Angeles and the other in the Bay area, and likely didn't need the Bakersfield plant.

Boxer urged Elsenhans to postpone the refinery's closure and demolition to allow time for a buyer to be found. That's not likely, a Shell spokesman said.

"Our decision is still to close the refinery on Sept. 30," spokesman Cameron Smyth responded.

Sen. Dianne Feinstein will join her fellow Democrat and send a similar letter to Shell next week, Feinstein's office said.

Shell officials have repeatedly said they are closing the Rosedale Highway refinery because of declining supplies of heavy crude oil in the San Joaquin Valley.

The Shell refinery is one of 13 refineries in the state, three of which the company owns.

The refinery also produces 7 percent of the state's diesel supply.

Boxer said that leads her to believe "there's some desire here to lessen the supply. And having gone through the electricity crisis in California, where manipulation of supply is what caused our crisis, I'm bound and determined to to do everything I can not to allow 2 percent of the (gasoline) supply to disappear because Shell will do better if there's less supply."

Smyth said any suggestion that Shell is closing the refinery to drive up prices or restrict supply is not true.

In her letter to FTC Chairman Muris, Boxer said she was joining Sen. Ron Wyden of Oregon in asking the commission to re-examine recent mergers in the gasoline industry in order to determine if the refinery's closure has anti-competitive implications.

Wyden sent Muris a letter in February and another in March.

Muris responded on Tuesday.

"The issues that you have raised are very important to this agency and will be seriously considered as the agency evaluates the situation with respect to the Bakersfield refinery and determines what course of action, if any, may be warranted."

"I urge you to use all legal courses of action to block closure of the refinery," Boxer wrote Lockyer.

A spokesman for Lockyer said the attorney general is doing just that.

Earlier this week, a consumer rights group based in Los Angeles called on Lockyer to force Shell to keep the refinery open or sell the plant.

[Eva]

You have to realize that there must be more to this closing than meets the eye. Think huge environmental mess such as leaking MTBE tanks. That is only one possibility, but no company shuts down a profitiable facility and refuses to sell it for no reason.

[Carry_Okie]

She must be desperate.

[NormsRevenge]

sure glad I don't drive a diesel.

[upchuck]

Kali, where new refinery capacity hasn't been built in many, many years.

[kenth]

You'll get hit indirectly anyway, since the transportation industry depends on it and will pass the increase on down to us.

[kcvl]

"The plant must remain open until a buyer is found and a sale is completed. Otherwise, consumers will pay the prices," Boxer wrote in a letter to FTC Chairman Timothy Muris.

So what are you waiting for Barbara Boxer? Buy it! If you think you can DEMAND that something stay open and you aren't the one PAYING for it, then either shut up or BUY IT!

[elbucko]

Think huge environmental mess such as leaking MTBE tanks.

That's quite possibly the reason to close but not sell. That MTBE was some nasty stuff. If a clean up is needed, the state should sue the Sierra Club and all other environmental organizations and foundations that had a hand in imposing MTBE use in California. In the meantime, the refinery can operate.

[NormsRevenge]

Good point.

[Eva]

It's the only thing that makes sense. There has to be a reason to shut the place down and not sell. If they sold they would have to clean up.

[GeronL]

When Democrats are fighting FOR an oil refinery, you know something is rotten in Denmark. Something stinks. Follow the money.

[kcvl]

They (Boxer & Democat/Liberals) don't want high fuel prices, they don't want us to get oil from the Middle East, they don't want us to drill in ANWR so where do they suggest that we get our fuel?

They have become a professional *itching party.

[GeronL]

MTBE, the environmentalists and government forced the industry to put that in the gas and the industry will soon be found liable for the pollution it wroughts.

Incredible.

[GeronL]

There has to be a reason to shut the place down and not sell

A- Its not profitable? Old technology.. inefficient...

[nightdriver]

The airheaded Sen. Boxer is again barking up the wrong tree.

Her problem is NOT with Shell/Texaco, but rather with the VERY democrat State Attourney General, Mr. Lockyer.

He was the one who forced Shell/Texaco to divest themselves of the refinery and he is the one who was instrumental in putting the moratorium on any more oil drilling in California, especially offshore.

Look for them to next RULE that oil companies have to make fuel products out of thin air.

Typical liberal non-think. Sen. Boxer is gloriously unencumbered with the thought process.

[DB]

What makes you think it's profitable?

All the enviromental regulations, fees and taxes makes one not want to do business in this state.

[kcvl]

The oil companies' lobbying group, the American Petroleum Institute, thinks the solution lies in increasing supply.

The group's chief economist, John Felmy, blamed the state's strict environmental laws for the dearth of refineries, whose numbers have dwindled from 33 in 1990 to 22 today.

As companies have shuttered their sites as the state's crude oil output has dwindled, Felmy said they've been hampered from regulations limiting expansion and construction of the massive fuel-producing sites.

``Your regulations make California a unique island, so when you raise prices, only a few refineries can supply you,'' Felmy said in a previous conference call with reporters. ``We need more refinery capacity in California and the U.S., but we face enormous challenges to build them.

``Where would we put them? We regularly face opposition from environmental groups, and we've had very low rates of return on our investments.''

In his presentation before the panel, Felmy recommended a streamlining of the permitting process for refinery expansion, which mirrors suggestions by the Energy Commission and the Auto Club.

Felmy also suggested that states need to adopt more complementary formulation standards. There are currently 18 different types of gasoline sold in the United States, with California's unique blend being both the cleanest and most expensive.

By reducing the number of so-called ``boutique fuels,'' either by converting other states to California's standards or the state switching to a different formulation, Felmy suggested that the state could import other blends of gas when supplies get short.

California's recent spikes came as refiners experienced maintenance problems as they switched from winter to summer formulation gas, which tapped reserves and sent wholesale prices soaring.

[Eva]

I read on another thread that the refinery was profitable. I assumed that was true. I have not heard otherwise. All of the refineries in CA are old so, maybe this one is particularly bad, but I think that are worse.

[kenth]

The other insane thing - I lost count as to how many times in the past I've heard a whiny leftist complain how backward we are compared to Europe. They thought we should be paying 3-5 bucks a gallon for gas in order to reduce usage and fund their little leftist agendas. Yet, when prices do go up a tiny bit, they lose their minds and go on to whine about the things you mentioned. They are certifiably insane.

[kcvl]

A Shell spokesman denied Boxer's accusation. The company plans to close the 72-year-old refinery at the end of September because crude oil supplies in the San Joaquin Valley are drying up and the refinery has not been profitable in two of the last three years, said spokesman Cameron Smyth.

"We have stated repeatedly that we would be more than willing to entertain any credible offer for the sale of the refinery," Smyth added. "To date we have not received any, and any prospective buyer will still face the same decline in crude availability that we face."