NEWELL - Ergon-West Virginia Inc. announced earlier this week that the local petroleum refinery is opposed to the "Cap and Trade" bill.

Neil Stanton, Ergon's plant manager, said via a press release that "the bill penalizes petroleum and puts small refineries like ours at a great disadvantage. If it becomes law, our plant will pay over $35 million for CO2 allowances starting in 2012. This is equivalent to 20-30 cents per gallon for gasoline and diesel. When allowance costs go up as projected, that figure will double or triple by 2020 and continue to increase as the CO2 cap comes down."

The H.R. 2454 American Clean Energy and Security Act, better known as the Waxman-Markey Cap and Trade Bill, was narrowly passed by the House (219-212) in June.

Title III of the bill caps greenhouse gas emissions at 2005 levels, establishes a government program to allocate emission allowances, requires the emitter to either pay for, trade, or offset them with reductions elsewhere, then promises to lower the cap from 2005 levels 3 percent by 2012, 20 percent by 2020, 42 percent by 2030 and 83 percent by 2050.

Most greenhouse gas emissions are carbon dioxide. Supporters of the bill state that the intent is to reduce greenhouse gas emissions believed to contribute to global warming, and to reduce dependence on foreign oil. Opponents state that those objectives will not be achieved and the added costs in energy will cause significant manufacturing job loss and further weaken our economy.

Supporters of the bill claim oil companies can absorb these costs or pass them along.

"Our plant can't absorb $35 million per year and continue to operate much less invest and grow. I don't think distributors and the motoring public are anxious to pay that extra 30 cents per gallon at the pump, either," Stanton said.

The Cap and Trade Bill provides some free credits for CO2 allowances in the early years. Industries like electric power generation and chemicals initially get 80-100 percent of their emissions free. Refining only gets about 5 percent and is responsible for all motor fuels sold.

"Transportation fuels were left out. Greenhouse gases that we emit at the plant only account for 10-15 percent of the allowances our refinery would have to buy. The other 85-90 percent is for vehicle emissions from the gasoline and diesel we sell. Whether or not that cost can be passed along to the consumer, it's still another tax on transportation fuel, but disguised by charging the refinery," Stanton said.

Stanton said small refineries in the U.S. have great concerns that plant shutdowns and loss of jobs will result from higher costs and foreign competition.

"Our refinery is ranked 120 in size out of the 143 in the country. Other plants our company owns are similar. This small size does not afford economy of scale and trade-offs that multi-national refineries ten times our size can generate," Stanton said. "Even worse, unregulated foreign refiners like those in China and India will gain further advantage, driving small U.S. refineries out of business. Because of lower efficiency and fewer controls, they will emit more for the same unit output. Greenhouse gas emissions will increase from developing nations, but we'll be left with fewer jobs and higher energy costs at home."

Statistics from the American Petroleum Institute report that more than1.7 million jobs in Ohio and West Virginia combined, or about 30 percent of all jobs in those states, are directly or indirectly supported by the oil and gas industry. The National Association of Manufacturers reports that both states will be among the hardest hit by cap and trade because of their industrial base.

"We have hardworking, dedicated employees at our plant and these are some of the best jobs in the area. Adding suppliers, services and related businesses, the number of people our plant supports is doubled or tripled. With high unemployment and shrinking industry in the valley, we can't afford to lose more good jobs," Stanton said.

Another issue of debate is national security, the release states.

"Cap and trade" does not protect motor fuels from foreign competition that do not regulate greenhouse gas emissions. Stanton said lost refinery capacity in the U.S. will be replaced with more imports of finished products.

"Four years ago, when hurricanes Katrina and Rita hit the gulf coast and gas shortages occurred, the outcry was 'we don't have enough refinery capacity in the U.S.' Gasoline imports are already double what they were 10 years ago," Stanton said. "This bill drives more refining capacity out of the country. We may end up less dependent on foreign crude oil, but more dependent on foreign gasoline and diesel imports. That can't be in our national interest.

"Protecting our employees, the community and the environment are our most fundamental business objectives. We are committed to meeting or exceeding all the regulations and permits under which we operate.

"Since 2000, 60 percent of all our major expenditures, over $70 million total, has been spent on environmental improvements. These investments have dominated our budget resulting in order of magnitude emission reductions from our plant and from those who use our products. More projects are on the books for regulations recently passed or in development.

"But if Waxman-Markey Cap and Trade or anything like it comes out of the Senate and becomes law, it could be overwhelming for small refineries like us to face."

The Senate is slated to take up Cap and Trade in committee during September.

"Climate change is a global issue, complex, controversial, sometimes emotional. We don't claim to know it all, but feel certain H.R. 2454 will be very costly to the economy, especially as we try to recover from a deep recession," Stanton said. "We do know the bill puts a huge financial burden on petroleum that will be most difficult for small refineries like Ergon to bear. This deeply concerns all our employees, their families and others who depend on the operation of this fine plant.

"We have been working hard to make our congressional representatives in Washington aware of the negative impact it could have on the valley and surrounding tri-state area. We hope others in the community will join us in asking them to oppose cap and trade."