As Texas Petrochemical Industry Booms, Warnings Of What Could Cause Bust

Early next year, the U.S. Supreme Court will consider a case that some say could have serious consequences for the Texas economy. The case involves new rules for industries that pollute the air. The state of Texas brought the case because it says those new rules could be devastating to profits and employment in the refining and petrochemical industries. StateImpact reporter Dave Fehling wanted to find out what's known about the cost of reducing pollution.


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A look at what past pollution-fighting rules did to industry

As the U.S. Supreme Court prepares to hear a Texas-backed challenge to new greenhouse gas limits for big polluters including the refining and petrochemical industry, politicians are warning of dire consequences should the rules take effect.

“These are great paying jobs along the Houston Ship Channel,” said Barry Smitherman — a Republican candidate, who currently is a commissioner with Railroad Commission — in a campaign video posted on YouTube. Smitherman is driving through an industrial area, talking to the camera.

“Yet the Obama EPA would try to shut these industries down, eliminating these great paying jobs.”

His warning is echoed by the petrochemical industry.

“Despite the protestations of the EPA and the Administration that these things are going to grow industry, bunk, that’s all I can say for that, pure bunk,” said Charles Drevna, president of the American Fuel & Petrochemical Manufacturers.

Drevna had warned in 2010 — when the federal Environmental Protection Agency’s  greenhouse gas rules were first announced — that they would cause “massive increases in energy costs and massive increase in unemployment.”


Do Regulations Kill Plants? Or Make Them Bigger?

In the past 20 years, a series of pollution-control rules have taken a toll on refineries nationwide.

According to 2011 report by the U.S. Department of Energy:

“This series of regulations forced U.S. refiners to invest billions of dollars for process, logistics and other capital upgrades…The cost of compliance contributed to economic stresses that resulted in the shutdown of 66 refineries from 1990 through 2010.”

But the report went on to say the shuttered refineries were mostly smaller ones. Big plants actually grew in size and total production capacity has actually increased.

One of the new rules apparently benefited the refining industry. Reporting by The Atlantic found that a rule that required cleaner burning low-sulfur diesel fuel created a new export market for the fuel that is produced in Gulf Coast refineries.  Europe and other foreign countries are now buying it because it meets their standard which was not the case when it contained higher levels of sulfur.

Supporters of the rules to reduce greenhouse gas emissions say there’s more to the equation than just the bottom line.

Mark Brownstein, chief counsel for the Environmental Defense Fund, told StateImpact: “I don’t look at regulation as constraining industrial growth.  I look at regulation as essentially being able to assure the public that as we get these economic benefits, we’re also able to protect their health and their environment.”


Current Reality: Boomtown

Despite the dire predictions of what might happen should new pollution rules take effect, the current reality along the Texas Gulf Coast is anything but a bust.

“It’s booming.  Lots of expansions, tons of expansions,” said Timothy Long.

Long works for a company that handles labor and safety support for the big construction projects underway at refineries in the Baytown area east of Houston. Long was among the lunch crowd at Tony’s Barbecue & Steak House.

Manager Thomas Medina surveyed the line forming at the buffet: “Pipeliners, welders, the corporate office people. More people are working. We’re talking like over 10,000 people.” 

Medina is referring to estimates for the number of workers who are now flooding the area. Big energy and chemical companies are spending billions of dollars expanding and upgrading plants as natural gas flows in from new wells in Texas and elsewhere, making it cheaper to produce chemicals. 

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