Monday, August 2, 2010

Public's risk, refineries' profits

A tanker approaches BP's terminal at Cherry Point on 28 July--the same day a tug/barge combo in the Strait of Juan de Fuca lost power for three hours.

Imagine you're leaning back in a chair, balanced on two legs. You could tip at any moment, hitting your head, probably damaging yourself. For every moment you balance, the oil companies get $5. Not only that: you're giving them two of those dollars for the privilege of your balancing act. And if you fall? Yeah, they'll help get you to the hospital--but you'll still have a cracked skull.

Right now in Washington, we're balancing expensive efforts to clean up Puget Sound with the likelihood of an oil spill tragedy that could wipe out much of the Sound's and Georgia Strait's ecosystem. With the Gulf spill still looming large, local eyes have turned to Puget Sound oil spill preparedness--especially given the loan out of most of our protective gear. Turns out, we're nowhere near as protected as we could hope, and the funds to improve our situation are scarce.

Washington's oil spill protections, required under law, were intended to be paid for in full by a 1992 tax of 5 cents per barrel of imported oil--4 cents into admin and preparedness work, 1 cent into a $9 million revolving fund to be used for cleanups. But with declines in per-barrel tax revenues, Washington taxpayers are currently covering the several million dollar difference between required protections and tax revenues.

What happened to the tax revenue? Using solid, legal, and profitable business practices, the oil companies have managed to undermine the oil protection tax revenue that was intended to pay for infrastructure that minimizes the public's risks related to oil shipping.

How have they done it? Washington State passed a tax (effective in 1992, details here) on oil imports to the state by tanker. If that oil is sold here, the refineries pay tax; if it's refined and re-exported, their tax is refunded. At the same time, there's no similar tax on pipeline imports from Canada, whether or not they're sold here.

Once the refineries saw the loophole, they started re-exporting all the tanker imports--here's your tax refund, boys!--and selling the Canadian import locally.

The result? Washington taxpayers and the Puget Sound continue to bear the same amount of risk, but refineries weasel out of $2 to $3 million a year of required oil spill prevention and cleanup costs. And who pays for it?

We all do, out of the Washington State general fund. The public gets the risk, and gets to pay for it, too. Now, just lean a little bit farther back in your chair...hand over some does it feel?

Here's a helpful list of oil spills and near-misses in the Northwest:

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