Facts At A Glance

Punitive Taxes and Renewable Fuel Trade-Offs Do Not Enhance Energy Security or Environmental Quality

"A realistic energy policy expands and diversifies our nation's fuel mix to meet increasing demand, but the political approach we're seeing today only creates winners and losers by isolating the domestic oil and gas industry for punitive taxes that would discourage reinvestments in new technologies and facility efficiency upgrades, to say nothing of hurting its competitiveness with state-owned oil companies in unstable regions of the world. For the benefit of the American consumer and global competitiveness, we'd urge Congress to consider the realistic approach to energy policy instead of the political approach."

Charles T. Drevna
Executive Vice President, National Petrochemical & Refiners Association (NPRA)
February 3, 2008

American Refiners Work to Meet Energy Demands and Reinvest Billions Each Year in Domestic Energy

New investments in 2006 alone reached more than $174 billion (a 29 percent increase over 2005). Between 1992 and 2006, the U.S. oil industry invested more than $1.25 trillion in a range of long-term energy initiatives. This compares to net income of $900 billion.

As demand has decreased and the price of oil has increased, refining margins have dropped across the board. Refiners, who must purchase oil on the markets to produce gasoline, are bearing the burden of high crude prices.

Section 199 Deduction Eases Strain on Overburdened Refining Industry, Maintains Competitiveness

The Section 199 deduction applies to a broad base of production activities; it does not specifically favor the oil and gas industry. Eliminating the deduction places them at a competitive disadvantage with other manufacturers.

The Section 199 deduction promotes much-needed investment in domestic energy infrastructure, encouraging refining capacity expansions, and domestic oil and gas production. With demand for gasoline continuing to grow each year, U.S. refining capacity is already significantly strained despite multi-billion dollar reinvestments by the industry to expand it. Most refineries are operating at more than 90 percent capacity throughout the year (except during maintenance season), which is significantly higher than the industrial average of about 75-80 percent of capacity.

Refiners compete in a global marketplace. Section 199 helps American refineries compete with foreign entities, bolstering national energy security.

Trading Oil for Renewables Does Not Enhance Energy Security or Environmental Quality

"The U.S. 'will need to have more imports of ethanol,' if it is to meet the new [20-in-10] mandate to cut gasoline use, the Energy Secretary Samuel Bodman said Thursday [January 25, 2007]." (Associated Press, "Bodman: U.S. Needs More Ethanol Imports," January 25, 2007)

"Converting rainforests, peatlands, savannas, or grasslands to produce biofuels in Brazil, Southeast Asia, and the United States creates a 'biofuel carbon debt' by releasing 17 to 420 times more carbon dioxide than the fossil fuels they replace." ("Climate Change and Energy: The True Cost of Biofuels," The Nature Conservancy Web site, Accessed February 11, 2008)