Blog neighbor Doug Maurstad continues to marvel at the shifting stories from the Hyperion windbags who claim they can build a profitable oil refinery in his beloved Union County. He says that instead of supporting Texas pipe dreams, we'd be better off if we just lived more simply and used less gasoline.
Talk like that about frugality and self-reliance might get Doug in good with our governor, but it won't make friends in the oil industry. Conservation is the last thing the oil industry wants us to pursue. But conservation, along with energy efficiency and the search for alternative fuels, is a big part of why there hasn't been a market for a new oil refinery in the United States since the 1970s. Don't take it from Doug and me; take it from The Economist:
The refining business has suffered from chronic overcapacity, and thus weak margins, since the 1970s oil shocks, which led to a slump in the use of oil-based fuels for generating electricity and heating homes. A respite came in 2005-07, as a buoyant rich world and increasingly thirsty emerging economies boosted demand. But that was a high point that the rich world may not hit again. Demand for petrol in America has fallen, and may never regain its previous peak. Refining margins, having touched $4.50 a barrel, are down to one-tenth of that and still falling ["Refined Tastes," The Economist, 2011.04.07].
The biggest obstacle to the Hyperion refinery is not the odd combination of tree-huggers like me and cranky codgers like Maurstad. It's not confounded Gaia-fetishizing environmental regulations. It's the market. The smart businessman refining oil in South Dakota would look for ways to hook his product into the really profitable expanding markets overseas, not into the stagnating domestic market. The really smart businessman wouldn't plunk his refinery in the middle of the continent in the first place; he'd build that refinery on the coast, as close to the big foreign buyers' boats as he could.
Hyperion's not happening, people, not in Union County. The market says so.
Old refineries expanded since they had grandfathered in their polution and new refineries needed to follow regulation. So Hyperion started saying that they would be a green refinery. Now they are not even filling an environmental impact statement. How did this happen you say, well Bush had deregulated by dividing up the EPA into state offices so Pierre got a tiny office with a couple of workers who did not have the staff to do anything but open the door in the morning. State government told us that since we know nothing about refining oil that they would rely on Washington to have the right rules and Washington had decided to let local control do it, so no one was doing anything except saying that someone else was. That is why they picked a conservative state in the middle of nowhere.
Hyperion started out saying that they would have a power plant like every refinery has. Well not every refinery does. Now in the last year they had a new employee from the east coast who did not know their past story and he said in a letter in the Argus Leader that they are unusual to have a power plant. But the original building permit had an unusual clause that said they could build a refinery and anything else they wanted to at a later date.
But for a while I wondered why they wanted to pipe tar to South Dakota since tar cannot be refined into gasoline. But then I noticed that the power plant would need fuel and tar does burn rather hot. I am not sure how much polution there is in burning tar but we will get it. This is timed about the same time that it now seems we do not need a Big Stone Two coal power plant. Tar or coal, it looks like we are getting tar.
Here's an interesting read.
The long emergency: surviving the converging catastrophes of the twenty-first century by James Howard Kunstler. In a nut shell, we (the world) hit our oil peak about 20 years ago, its all down hill from here, and it isn't going to be pretty. We don't have a copy here at MPL, but Melanie, the interlibrary loan wizard can get you one, all you need is a library card.
Bruce
Kunstler: excellent author!