US auto efficiency rule seen to have little refining impact

20 May 2009 21:31  [Source: ICIS news]

WASHINGTON (ICIS news)--The new automotive fuel efficiency standard set by President Barack Obama probably will have little impact on the US refining sector or gasoline demand, industry officials said on Wednesday.

“There will always be a demand for transportation fuels and certainly petroleum-based fuels in the foreseeable future,” said Bill Holbrook, spokesman for the National Petrochemical & Refiners Association (NPRA), adding he saw little impact for refiners in the new standards.

In an agreement with automakers and state governments announced on Tuesday, Obama said he is advancing the schedule for increased fuel efficiency for automobiles to require an average of 35.5 miles per gallon (mpg) (15.1 km/litre) by 2016.

Known as the corporate average fuel economy (CAFE) standard, the earlier target under the 2007 federal energy bill called for a 35 mpg capability by 2020.

The CAFE standard measures the average fuel efficiency of an automaker’s entire product fleet.

Holbrook noted that in addition to continuing demand for petroleum-based transportation fuels, “manufacturers also need petroleum-based feedstocks to make their products, thus demand for the hydrocarbon molecule will continue to be there”.

He said that NPRA is not opposed to improving energy and fuel efficiency. “Our members work hard and reinvest a lot of money every year to improve efficiency at their facilities,” he said. “It’s good business.”

Bill Bush, spokesman for the American Petroleum Institute (API), whose member companies include refiners as well as oil and gas exploration and development firms, said the new CAFE timeline “could have an impact on demand, but as a trade association we don’t project what demand might be”.

However, Bush, too, said the new CAFE schedule “is not a major concern” for API companies. “It is really an automobile thing more than ours.”

NPRA’s Holbrook said that impact of the new CAFE standard on the refining industry is negligible compared with the potential effect of climate control legislation now being considered in Congress.

That bill, HR-2454, would impose a cap-and-trade emissions mandate on US industries and the transportation sector.

Holbrook said that legislation, if approved by Congress, would deliver a double blow to refiners. That bill, he said, “would cap greenhouse emissions from our facilities and those emissions resulting from the use of the fuels we manufacture”.

“We feel that HR-2454 hurts our global competitiveness in the refined products markets and thus is detrimental not only to the domestic refining community but also to American consumers, farmers and truckers,” he said.

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By: Joe Kamalick
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