by Andrew Walden
Do you think gasoline and utility bills are high now? Just wait. The worst is yet to come.
Tesoro’s January 10 announcement that it was seeking a buyer for its Hawaii refinery drew a two-fold response in Governor Neil Abercrombie’s State of the State speech:
“we must lessen our dependence on imported oil,” and “Our Department of Labor and Industrial Relations stands ready to provide job assistance for those who need it.”
The message to any buyer looking at Tesoro’s Kapolei refinery is clear. Abercrombie is suggesting Tesoro might close the refinery instead of selling it. And by declining to offer any goodwill from the State, the Administration is doing what it can to promote closure—or discourage a buyer who does not meet the proper political criterion. Politically incorrect buyers can expect nothing but obstruction from the State.
Abercrombie’s statement is an eerie echo of his December 17 comment on the closure of Oahu’s two HMC hospitals: “I don’t want to put anything out there that would create a false impression we are working on it.” We all know how that ended.
The higher gasoline and electricity rates become, the less ridiculous big wind, undersea cables, and industrial-scale solar seem. Jacking up the price of fuel has been an openly expressed goal of the well-heeled eco-elite ever since billionaire Pierre Omidyar paid Kanu Hawaii operatives to lobby the 2009 legislative session for a barrel tax designed to force the price of imported oil up to $100 per barrel.
In addition to raising prices for Hawaii consumers, biofuel production is a leading cause of deforestation worldwide—undermining the claim that biofuels are carbon neutral. Biofuels also harm the world’s poorest people by contributing to higher world food prices as farm land is diverted to fuel production.
It is doubtful Abercrombie could actually succeed in forcing a Tesoro shutdown. In its news release, Tesoro says it is pursuing a planned sale driven by corporate realignment, not losses:
“there is no question that it offers value for the right investor…. The Kapolei refinery enjoys a favorable geographic position, excellent logistical infrastructure and an advantaged configuration that make it an attractive business for interested buyers. The refinery yield is distillate-focused and is complementary to the on-island demand for utility, jet and military fuels.”
More likely, Abercrombie is trying to drive the sale price down while tilting the scales to provide an advantage to Hawaii’s politically connected bio-fuel scammers in any purchase negotiations. Other green energy scammers would then benefit from the higher fuel prices imposed on the state. Presaging Abercrombie’s remarks, the Star-Advertiser editorialized January 15:
(Tesoro) executive Lynn Westfall said in March 2010 that the Hawaii operations the previous year was a loss, due in part to the market's small size and low growth prospects.
The sale of Tesoro's Hawaii assets is not due to happen until mid-year, but state officials are already on alert that this could be a disruptive event. Under state laws that aim to keep trade as open as possible, the state Office of the Attorney General could bring court actions to prevent a sale that may lessen competition or "tend to create a monopoly in any line of commerce."…
…if the state is serious about its clean-energy timetable -- and it should be -- the market will reach a point at which demand for oil is too low to support competing refineries. Competition will then need to come from alternative energy sources giving consumers a choice.
Hawaii is not prepared for that. Thanks to the Pentagon, which is concerned about energy security worldwide, the military has been increasing purchases of biofuels and is testing ways to use more of them in surface ships and aircraft.
But the civilian sector needs alternatives to petroleum fuels, too. The advent of electric vehicles is promising, but the electrical grid can't yet yield the energy that a wholesale conversion to EV cars would require. Liquid fuels will be needed. Biofuel production -- using locally produced feedstock -- must be ramped up. Storage and delivery systems for these fuels must be developed to prepare Hawaii for a rebalanced energy portfolio.
Various government and private experts who have tracked Hawaii's energy plans agree that tectonic shifts have long been expected. For example, the U.S. DOE funded a demonstration project on the Tesoro site to explore the possibility of converting one of the refineries to biofuel. That concept deserves further exploration.
So the only real question is which group of Biofuel scammers are angling for control of Tesoro. The most likely player would be Aina Koa Pono, a hui of local big-wigs, which drew back a nub after the PUC cut off their effort to impose a biofuel contract estimated at $170/barrel on HECO. Another possibility: Pacific Biodiesel, those owners—including Willie Nelson--played a leading role in Abercrombie’s election campaign after receiving a $3.5M congressional earmark.
If biofuel scammers gain control of the state’s largest refinery, consumers can count on paying higher gasoline prices and electric bills, tourism will suffer as fuel costs drive up airline fares, and the military will suffer due to increased costs and the decreased reliability inherent in having an oil refinery owned by those whose business model is fundamentally hostile to oil refining.
The question is whether any of these groups will stand up and demand that the refinery be sold only to a real oil company not tied to Hawaii’s corrupt local elites. Do consumers really want to pay $6/gallon for gas? Hawaii consumers can only be liberated from price gouging biofuel scammers if Tesoro's Kapolei Refinery is purchased by a real oil company like Exxon-Mobil or Shell.