Oil refiners’ stocks drop after EPA proposal

Sulfur levels in gasoline must drop 60% by 2017


On Friday, the EPA proposed that sulfur levels in gasoline be reduced by more than 60 percent in 2017. The news had a delayed effect on oil refiners, whose stock prices started to decline on Tuesday. That continued Wednesday.

Findlay-based Marathon Petroleum Corp. has seen its stock fall 9.4 percent in the last two days, from $89.83 at the close Monday to $81.39 at the close Wednesday. Valero Energy Corp. dropped 9.7 percent in two days. Phillips 66 fell 10 percent.

A Valero spokesman said Tuesday the company expects to spend $300 million to $400 million building equipment and expanding existing facilities to meet the new standards. Valero also expects spend more each year on operations to support these new processes, but exact costs have yet to be determined.

Marathon Petroleum declined to release any specific information about the impact of the regulations. Company spokesman Shane Pochard did release a statement about the proposal.

“While we are in the process of reviewing the EPA’s proposal, we, along with others in the industry, do not believe the Tier 3 regulations are warranted,” he wrote.

“There has not been an adequate demonstration of justification for the rule. This rule will by definition impose additional costs on refiners since it will require additional investment.

“This could lead to a reduction in supply, potential closure of refineries, and increased imports.”

The EPA must hold public hearings before finalizing the rules.

Julia Valentine, an EPA spokesman, did not follow up on a request by The Blade for information about the impact the regulations could have on oil refiners.

The EPA’s Web site says, “The proposed sulfur standards will cost refineries less than a penny per gallon of gasoline on average once the standards are fully in place.

“The proposed vehicle standards will have an average cost of about $130 per vehicle in 2025. The proposal also includes flexibilities for small businesses, including hardship provisions and additional lead time for compliance.”

The EPA estimates the regulations will result in health-related benefits of $8 billion to $23 billion annually in 2030.

It says the changes could “prevent up to 2,400 premature deaths, 23,000 cases of respiratory ailments in children, 3,200 hospital admissions and asthma-related emergency room visits, and 1.8 million lost school days, work days, and days when activities would be restricted due to air pollution.”

Contact Kris Turner at: kturner@theblade.com or 419-724-6103.