Valero Energy Corp. chief executive officer Bill Klesse hopes the Waxman-Markey bill, which includes a proposal to enact a cap-and-trade system in the country, is eventually defeated when it gets into the U.S. Senate, he said Tuesday.
The executive, who leads the largest independent oil refinery in the country, said the bill would impose a hidden tax in the form of a cap-and-trade system. Klesse said the bill is a huge negative for consumers and the country, as refiners would be charged for the carbon dioxide emissions they generate and consequently pass the costs to consumers.
Every single fuel that is produced will go up on price (under cap-and-trade), Klesse said today during a conference call with investors. We (Valero) are going to be very active on participation on how much this means to the consumer, to this industry and to the American Economy.â€
Klesse's comments came today the company reported a loss of $254 million or 48 cents per share and revenue of $17.9 billion in the second quarter, compared with revenue of $36.6 billion a year ago. The company cited lower diesel and jet fuel margins and lower sour crude oil differentials.
Valero is backing critics of the proposed legislation who cite the Congressional Budget Office which projects an increase of 77 cents per gallon of gasoline if the cap-and-trade legislation passes. This means an additional $800 per year for gasoline considering each family consumes 20 gallons per week, according to the CBO.
Klesse also based his comments on analysis from the Heritage Foundation which found the bill would cause a loss of $393 billion of the U.S.' real gross domestic product hitting a high of $662 billion in 2035 and resulting in a total loss of $9.4 trillion by 2035.
The foundationâ€™s analysis projects that by 2035 there will be 2.5 million jobs lost due to the cap-and-trade bill.
For a household of four, it would cost about $2,979 per year and increase to $4,600 in 2035 including power, food, supplies, gasoline and transportation expenses, the foundation states. In contrast, the Environmental Protection Agency says the bill would cost households $140 a year and predicts electric bills will be 7 percent lower in 2020 because of the legislation.
The Waxman-Markey bill was passed narrowly by the House of Representatives in June. It was being promoted as a bill aimed to cut greenhouse gas emissions linked to global warming, including carbon dioxide.
Under the bill, companies will be given permits to pollute and would be able to sell and buy additional permits in a market.
However critics of the legislation say the U.S. alone will not contribute to significant reductions of worldwide emissions if India and China - which have already declined to participate in climate change control - and other developing countries don't implement similar measures.
The U.S. Senate Committee on Environment & Public Works is currently holding hearings on the bill and is expected to write its version of the legislation by September, according to the committee's chairman Barbara Boxer, Reuters noted.