Here’s a fun fact: the largest oil refinery in the Northwest is owned and operated by BP. It’s located just outside Bellingham, and it’s capable of refining 225,000 barrels of oil per day.
Here’s another fun fact: last month, state officials slapped BP with 13 serious safety violations at the refinery. According to safety inspectors:
Of the violations, 12 involve state safety regulations that govern any production process that uses highly hazardous chemicals. Problems include outdated instrument diagrams and safety devices that were not being routinely inspected or maintained.
In fairness to BP, inspectors found the same kinds of violations at each of the refineries in Washington, which could help explain the deadly April explosion at Tesoro’s Anacortes plant.
Okay, here’s another fun fact: the Washington legislature recently declined to bump up a tax on petroleum products and other hazardous substances. Word on the street is that lawmakers didn’t want to penalize the state’s oil industry.
That’s a shame, because the hazardous substances tax bump could have generated roughly $100 million from BP alone. That’s new revenue. Annually.
It’s money that would have been used to shore up the state’s anemic general fund. And, over time, it’s money that would have been set aside for pollution clean-up. In light of what’s happening in the Gulf of Mexico—and the deepening hole in state finances—I wonder if legislators will reconsider.
Notes: The proposed law went through several transformations, but in one early iteration of the proposal, it would have boosted the tax from 0.7 percent to 2 percent of the wholesale price of hazardous substances, which includes refined petroleum products. My calculation of “roughly $100 million” is based on BP producing 215,000 barrels per day at the facility, as they did in 2005, the most recent year for which I could find production data. I assumed a wholesale price of $2.30 per gallon of refined product, which is consistent with the most recent price data for gasoline that is available from the US Energy Information Administration. I also assumed that there was no “export credit,” so that all of the product refined in Washington was subject to the tax even if it was exported to other states for retail sale. It’s worth noting that BP would likely have passed on the cost of the tax increase to consumers, at least where it was possible to do so.
VeloBusDriver
“…the hazardous substances tax bump could have generated roughly $100 million from BP alone. That’s new revenue. Annually.”The check to the State of Washington may come from BP but in reality, it’s coming out of our collective pockets, not BP’s. That’s not a bad thing since gasoline and diesel are woefully under-priced. Asserting that the revenue comes from BP could be seen as disingenuous since the consumer will ultimately bear these costs.
Eric de Place
Velo,I take your point—in fact, see my last sentence under “notes”—but it’s actually not entirely true in this case. BP and other sellers of petroleum products can, and probably would, pass the cost of the tax increase on to consumers when they are selling into a marketplace like Washington where all the competitors are subject to the same tax increase. But roughly half of the oil refined in Washington is actually exported to other states—and it’s not clear that they would be able to bump up the cost on Oregon or Idaho consumers in the same way.What’s weird though, is that the legislature didn’t seem terribly worried about consumer costs, yet they were quite worried about adversely harming the big oil refineries in the state. At least that seems to be the consensus from folks who spend a lot of time at the state capital.