Delta Airlines Refining Oil Doesn’t Solve The Problem

Psst: Don’t tell anybody, but the worst-kept secret in  Pennsylvania is that the natural gas industry --- the only economic salvation our dying state had--- is leaving in droves, replaced by job loss, budget holes and despair.

Like most tragedies, this one was preventable. Only common sense and foresight were required. But those traits were pumped dry long ago, so instead of experiencing a booming economy rooted in the rebirth of American manufacturing, Pennsylvania is now witness to yet another long exodus of our best and brightest.  And the Commonwealth’s march toward permanent mediocrity is accelerating.

Natural Gas Industry Exiting PA

As with most things, our elected officials couldn’t see the forest for the trees, and now that the gas industry is packing up their mobile rigs and making for greener pastures, (or, more accurately, black pastures, as in Black Gold), the recently passed gas “impact” tax will be as impactful as Mitt Romney’s Position-du-jour.

Why is the gas industry leaving? Simple. They are losing money hand over fist, as natural gas is sitting at a ten-year low due to lack of demand.  So let’s get this straight.  We ignore cheap, abundant and clean natural gas while continually getting hosed at the pump from record-setting oil prices. And as a direct result of soaring gasoline prices, inflation is rising unchecked and true economic growth is vaporizing before our eyes.

Only in America --- literally.

No other country on the planet would permit this kind of self-destruction, willfully sending hard-earned money to overseas adversaries while doing everything in its power to bite the (domestic) hand that feeds it. And that paralyzing incompetence comes from being fat, dumb and lazy while aggressive competitors do whatever is necessary to gain an advantage.

Because of this choice, the U.S. remains dependent on others for its energy needs.  In addition to the obvious national security concerns (we wouldn’t be expending blood and treasure in the Middle East if we drilled domestically), we are willfully engaged in the greatest transfer of wealth in the history of mankind, as hundreds of billions go to China and Middle Eastern oil barons because we refuse to harness our limitless natural resources.

The way out of the recession --- permanently --- is to keep American petro dollars here.  And by the way, “here” doesn’t mean Canada, since it too is a foreign nation. So Republicans need to stop their grandstanding about the Keystone XL pipeline, which, if approved, would only re-direct American money to our Canuck friends.  By definition, that neither achieves energy independence nor creates large-scale American jobs. But never let the facts stand in the way of a good political gimmick.

America will never compete with Chinese labor costs, but the untold story is that we don’t have to.  We beat them by having the world’s cheapest energy costs, and that, along with reworked trade policies, would level the manufacturing playing field and get America making things again.

Just look at Proctor and Gamble’s manufacturing plant in Pennsylvania.  An energy bill in the tens of millions was virtually eliminated after the discovery of natural gas under the plant.  Saving that much money leads to company expansion, additional jobs, more service industries, and a larger tax base. 

But instead of embracing that kind of success, our leaders have punted the ball. Why haven’t all state buildings and vehicles been mandated to operate on natural gas? Why haven’t tax incentives been offered to private sector companies willing to invest in natural gas refueling stations? Why haven’t efforts been made to rescind job-killing and innovation-stifling regulations? Why weren’t the success stories of companies like Proctor and Gamble told and sold by our top political leaders? 

No vision, and no gameplan. And now it’s getting late in the fourth quarter.

Converting the refineries

But there is an opportunity that could provide the same type of boom on a much greater scale: convert the Sunoco and ConocoPhillips refineries in Philadelphia to process natural gas rather than the much more expensive crude oil.

(Note: While a Delta Airline’s subsidiary just bought the Conoco refinery to make its own jet fuel, we’ll see whether that high-altitude idea flies, since airlines have a hard enough time staying in the air financially.  An airline getting into the fuel business has the right idea, as lower fuel prices will make their bottom line take-off.  But given the industry’s track record, that type of diversification could send Delta into a tailspin, possibly ending in a crash-and-burn scenario. And that would occur for much the same reason that the oil companies themselves are divesting themselves of their refining operations --- wild fluctuations in the price of oil and mindboggling regulations make it inherently unprofitable.)

However, if Delta really wanted to lower costs over the long-haul, it might consider retooling its refinery to convert abundant natural gas from 100 miles away to jet fuel ---rather than relying on oil shipments in a volatile market from across the world.

Sure, converting a refinery to process natural gas rather than oil takes a significant investment, but it is one that would pay huge dividends given that America’s insatiable appetite for energy (and in Delta’s case, jet fuel) will only increase.  And that’s a good thing, because increased energy demand means companies are thriving, jobs are being created, people are traveling and the economy would be truly gaining strength (unlike the disingenuous “recovery” claims now made by government and the media).

How to do it? After the refinery conversion (and elimination of many energy-sector regulations that drive up costs), immense amounts of “dry” natural gas, primarily from northeastern Pennsylvania, would be piped down to the refinery, utilizing the right-of-way alongside the Northeast Extension of the Turnpike.

The dry natural gas would then be converted to gasoline, diesel, and jet fuel --- at a consumer price point that may well be under $2 per gallon.  Fuel that inexpensive becomes an instant win-win: the rebirth of manufacturing, big job gains, fewer foreclosures, and the satisfaction of knowing that national security is bolstered every time you hit the pump.

In addition to Philadelphia’s refineries being in an ideal location for disbursement of those refined products, there is yet another opportunity for economic growth.  To meet what would surely be increased domestic and overseas demand, a pipeline could be constructed down the Delaware River, terminating offshore so that tankers could safely take on their loads out at sea.

(A liquefied natural gas tanker explosion, whether accidental or deliberate, would be akin to a small nuclear weapon. While extremely unlikely, that possibility would nonetheless present huge political challenges in allowing large LNG tankers in the Delaware River.)

Refine Our Way Of Thinking

Despite their good intentions trying to save the refineries, some politicians have missed the boat by only pushing the idea of exporting natural gas from Philadelphia.  That won’t create jobs, as we would merely be shipping the gas to be refined elsewhere.  How ironic that would be, watching Pennsylvania export its lifeblood in the shadow of three refineries, any and all of which could keep all of the economic benefits here, and none of which will likely be profitable refining oil as currently outfitted.

Failure to convert the refineries may well kill off the gas industry altogether, making us ever more dependent on foreigners for our vital energy needs while prices continue to soar.

But if we rekindle that slumbering can-do American spirit and put America first for a change, the possibilities would be limitless, and we would no longer be bent over a barrel.

And what a gas that would be.

An accredited member of the media, Chris Freind is an independent columnist, television/radio commentator, and investigative reporter who operates his own news bureau, www.FreindlyFireZone.com  His self-syndicated model has earned him the largest cumulative media voice in Pennsylvania. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Second in a series on how retooled refineries can save jobs and revitalize manufacturing

“Thank you for trying to get those who should understand the urgency of energy independence, jobs, and our future…to do so.  (We are) loading up the SUV almost every day to give away household items to Neighborhood Services and friends…and preparing to relocate if necessary.  You are right… finding middle class wages here in Pennsylvania is challenging if not impossible.  The blood, sweat and tears of years planning and building our dream home only to sell it in a bad housing market is like adding salt to the wound….”

This heartbreaking message was sent by a distraught wife of a 19-year Sunoco refinery worker, as that company’s two refineries (Philadelphia and Marcus Hook) are slated for closing, as is the ConocoPhillips refinery in Trainer, Delaware County, if no buyers are found.  Making the sin mortal, there are reports that the ConocoPhillips plant might be dismantled, shipped overseas, and resurrected in a foreign—potentially adversarial — country.  But this is nothing new, as America’s abandonment of its manufacturing base has often included shipping entire facilities overseas for the benefit of our competitors.

Can it be reversed? Is it possible not only to save these refinery jobs but at the same time create a rebirth of American manufacturing — mandatory for the nation’s future since no country has ever survived without an industrial base?  Many “experts” will arrogantly claim “no,” that America can’t compete with Chinese labor costs, and smugly proclaim that manufacturing is passé anyway— unnecessary in a modern 21st century economy.

Unfortunately, the wrong people here are losing their jobs.  The backbone of America shouldn’t be facing the unemployment lines. The so-called experts, including the politicians from both Parties who got us into this mess, should be the ones getting canned.

(See Freindly Fire’s Sunoco Refinery Part One:)

http://blogs.phillymag.com/the_philly_post/2011/12/21/save-philadelphias-sunoco-refinery-jobs/

But if we are to save jobs by retooling the refineries to process God’s gift to Pennsylvania (and the nation) — Marcellus Shale natural gas — it is imperative to stop the blame game and halt the tendency, while natural in a time of such high emotion,  to conveniently point fingers at whatever “boogeyman of the day” caused this unfortunate situation. Likewise, the fly-by-night ideas proposed by some shortsighted politicians must be seen for what they are: either clueless suggestions or a naked pandering for votes.

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Who Didn’t Cause The Problem

Sunoco

A million dollars is a lot of money — who hasn’t thought about having that much cash? You could do a lot with a mil per year, even more if you made that per week, and would be king of the world if you raked in seven figures per day, especially if that that was the case for three straight years. Life would be sweet — unless, of course, you happened to be in the sweet crude oil refining business in a deteriorating market.

So let’s be consistent. If making a million a day is desirable, losing that amount on a daily basis would be, in professional financial nomenclature, very, very bad. Common sense tells us that anyone losing a million a day for three years would do everything possible to stop the hemorrhaging. Welcome to Sunoco’s plight.

Ask any student unschooled in economics what the primary objective of business is, and he will invariably answer, “to make money.” Wrong.  Making money is easy.  Earning a profit by taking in more than you spend — the correct answer — is the hard part.

Despite the misguided “Occupy” mentality that profits are nothing more than gluttonous greed, the truth is quite different. They are necessary to expand operations, hire more personnel, pay salaries and benefits, and contribute to the overall health of a company —and the entire economy.  (Not that Wall Street greed doesn’t exist in numerous other forms, much of which should be regulated/outlawed, but that is another column).

Sunoco and ConocoPhillips are not in the “business” of losing money, and their past profits and payouts to shareholders are completely irrelevant to the fact that the outlook for the refining business is bleak.  They are under no moral, ethical or financial obligation to keep the doors open. Keeping people employed inefficiently—READ: subsidized — in a business with no possibility of profit is anathema to the Free Market and would eventually collapse the entire entity.  This is not speculation but economic certainty.

And if you want to see what happens when this course is recklessly pursued, pull up a chair because you’re in luck. You have a ringside seat watching such an implosion in action: the unsustainable economic policies of the United States Government.

It is also important to note that in 2009, Sunoco announced a significant worker layoff in an attempt to improve company competitiveness — and all were white collar, with no unionized personnel getting pink slips.  Closing the refineries is anything but anti-labor.

Unions

The refinery shutdowns have nothing to do with “greedy unions sucking too much money” from the companies’ bottom lines, as some critics of organized labor incorrectly state. Many of those in refinery operations are highly- skilled union workers who have made a solid living over the last several decades. But a look at the market conditions shows such a minefield ahead for the companies that no amount of concessions would come close to solving the problem.  In the big picture, the significant obstacles facing Sunoco and ConocoPhillips are infinitely greater than any “high” labor costs associated with operating the refineries.

Just like “evil empire” rich oil company executives make inviting targets for blame, so do “pillaging” unions who “want more for doing less.” Is either side perfect? Of course not, since there is no such thing. But while both make good scapegoats, it is simply counterproductive to continually throw darts at them.  Insults don’t solve problems. Strategic vision and genuine partnerships do. The only thing that matters is solving the problem — and quickly.

Obama

Some find it convenient to blame the President for everything from high gas prices to their children getting a bad test grade. While he certainly has his faults, he extended his hand to the Republicans on the single most important issue of our time — moving America towards energy independence.  If some of his suggestions had been enacted (which, in reality, are part of the Republican platform), they would have quite possibly made the refining outlook much brighter for Sunoco and Conoco, and the shutdowns may not have occurred.

And the GOP response? No bills were introduced, and they absolutely refused to work with the President, with many stating that “he didn’t really believe what he was saying.”  What a brilliant, mature response.

For the disbelievers who need proof, just watch the President’s 2010 State of the Union speech, when, in front of the entire nation, he urged Congress to expand our offshore drilling ventures, and freed up millions of acres of coastal water for exploration and development. In addition, he called for an increase in nuclear power plants across America and pursued loan guarantees for new facilities (even one year later in light of the Japanese disaster).

Which was interesting, not only because he went against one of his strongest constituencies (the environmental lobby), but also because Obama’s move threw a wrench in the conspiracy that he was a closet Muslim who wanted to weaken America. Pushing for energy independence would be the polar opposite way to achieve that goal.

Granted, Obama has not been stellar in following up on his domestic drilling initiatives after the BP spill, and has yet to authorize the critical Keystone XL Pipeline project, but those shortcomings pale in comparison to the other Party’s inaction.

What did oilman George W. Bush or his Halliburton-affiliated sidekick Dick Cheyney do to increase domestic production? Zero.

Or the patriarch of the Bush family, George Herbert Walker Bush?  Well, it was the elder Bush who signed the moratorium on offshore drilling. His son W. left it in place for seven years, despite having sizable majorities in both Houses of Congress. Only after fuel costs skyrocketed to over $4.50 per gallon in 2008 did he call for the lifting of the moratorium. But it was too little, too late. And it never happened.

What could have prevented those crippling spikes at the pump? Offshore drilling — both off the continental shelves and in ANWR (the Arctic National Wildlife Refuge) — and the construction of new refineries, given that the last one was built in 1976.

And what better time to have pushed it through than right after the September 11 attacks. In addition to having a Republican congress and nearly 100 percent of the nation behind him, Bush had the world’s goodwill in his corner.

Instead, this nation’s reliance on foreign oil — which is a nice way of saying we are pumping billions of petro dollars into the coffers of some who are hell bent on destroying us — has only increased.

And this week, gas hit another all-time high for this time of year.

Both Parties are guilty of forsaking America’s security and economic well-being. It is only right that they atone by eliminating the red tape, bureaucracy and onerous regulations placed upon the energy industry, as well as rescind the economy-killing taxes on fuel.  Those steps would make it infinitely more palatable for entrepreneurs to convert the refineries, keeping those strategic assets and jobs exactly where they belong: in America.

Parts Three and Four will detail solutions for how refinery conversions can jumpstart the economy through specific uses of dry and wet natural gas — while NOT making Philadelphia a port for Liquefied Natural Gas. 

Chris Freind is an independent columnist, television/radio commentator, and investigative reporter who operates his own news bureau, www.FreindlyFireZone.com  His self-syndicated model has earned him the largest cumulative media voice in Pennsylvania. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Part 1 of a series on saving refinery jobs and getting America working again

For the tens of thousands whose livelihoods depend on the Sunoco and Conoco-Phillips oil refineries in Philadelphia, Marcus Hook and Trainer, the Grinch arrived early this Christmas, announcing that all three facilities would be closing in the near future.

But unlike the Grinch who delighted in causing misery for the sake of misery, the oil companies seemed to have no choice.  Their hand was forced by a combination of market forces that saw them losing millions every single day.

And now, short of the companies finding buyers, those workers will be thrown out into the cold, unemployed in an America that is plunging further into the abyss. An America that doesn’t make a bloody thing anymore.  An America with the highest corporate taxes in the world.  And an America with trade policies that sell out its own citizens.

Making matters worse, most of the workers will be seeking new jobs in Pennsylvania, one of the least competitive states in the nation when it comes to attracting new companies.

Doom and gloom? No, just the hard truth.  And here’s another one. Short of packing up and moving to refinery-laden Louisiana, most of the laid off workers will never find a job in this region close to the pay scale and skill level which they are leaving.

Welcome to The New America, one that too often puts the interests of its competitors --- and even its adversaries --- ahead of its own citizens.

Compounding the problem even further (if that’s possible) is the unwanted involvement of those who caused our economic mess in the first place --- the politicians.  And, as they continue to demonstrate, they don’t have the slightest clue as to how to right the ship.

Politicians need to be taken out of the equation. Pandering for votes by holding pointless meetings with refinery and union officials isn’t solving anything.  It only gives false hope (while providing them with 30-second sound bites).

But here’s the good news.  There is hope, more than can be imagined. Those refinery workers could not be sitting on a better spot on Earth to reap the rewards of a massive opportunity --- the correct utilization of the Marcellus Shale natural gas bonanza. If the politicians do their most important job --- and the only one they should be doing --- of cutting bureaucratic red tape and slashing stifling regulations, the free market will take hold, creating jobs and wealth of unprecedented proportions.

But that’s a tall order.

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Former Governor Ed Rendell, while certainly an affable chap, was never mistaken for a genius, especially when it came to getting Pennsylvanians working again.  His mentality was that a paternalistic government knows best, derived no doubt from the fact that he virtually never held a private sector job in his life. Thus, he was wholly incapable of understanding the difficult decisions that businesses must make to maintain profitability.

So it was no surprise when, in 2009, Rendell inserted his nose where it didn’t belong, publicly excoriating Sunoco for its decision to lay off some of its salaried workforce.  Sunoco officials had stated the move was geared towards remaining competitive, as the company was anticipating a “more difficult economic reality” moving forward.

Taking his criticism even further, Rendell flatly rejected the decision-making of Sunoco’s Chairman and CEO Lynn Elsenhans, arrogantly saying he couldn’t take her at her word. Incredibly, he went so far as to state the “real” reason for the layoffs: “They are solely intended to make a profitable company more profitable and helping pad the dividends paid to shareholders.”

So if Ed was correct (which is always the case – just ask him), Sunoco’s recent decision to shut down its refineries --- permanently --- must be because it’s just making too much money. 

Or…

Maybe the folks at Sunoco had a slightly better idea than Ed Rendell of the deteriorating market conditions coming down the pike, and maneuvered accordingly to keep its head above water.  Despite their best efforts though, Sunoco did not meet with success, as the closures clearly indicate.

Now the big questions loom --- can the refineries be saved, will a buyer be found, can they be converted to refine natural gas, and, of course, what will be the fate of the thousands of families whose livelihoods depend on the refineries?

While Rendell is out of the picture, the involvement of other elected officials still leaves a lot to be desired.

Earlier this week, members of Congress emerged, extremely frustrated, from a meeting with refinery officials, complaining that the company wouldn’t reveal details about highly confidential strategic negotiations with potential buyers.

Earth to Congress: Have We Met? Who do these guys think they are that Sunoco owes them an explanation for anything, let alone sharing privileged information of the highest magnitude? And do we even have to mention that Congress hasn’t been able to keep anything secret in 200 years?

And last month, a bipartisan congressional delegation called on the U.S. Energy Information Administration (along with the U.S. Department of Energy and the Federal Energy Regulatory Commission) to conduct an impact analysis on the potential of the refineries’ closure.

Uh, here’s a not-so-humble message to each member of that delegation: your proctologist called.  He found your head.

Are they serious? Another Blue-Ribbon study to tell us what any sixth-grader already knows? 

It will be bad.  Very, very bad. Jobs will be lost, families thrown into chaos, houses foreclosed, businesses shuttered.  The refining capacity for the East Coast will suffer tremendously (not helped, of course, by the fact that we haven’t built a new refinery in America since 1976). Prices will increase. Volatility will spike. And America will, yet again, find itself bent over the barrel, spending billions more petro dollars buying oil from hostile nations because we (READ: Congress)  will not do the obvious --- implement a policy of energy independence.

So let’s save the tens of millions of taxpayer dollars on an absolutely meaningless study, and do something novel: solve the problem!

And to reiterate Step One, the politicians woefully short on private sector experience and who lack the necessary vision to turn an unfortunate situation into a positive one need to get out of the way and let business-savvy entrepreneurs do what they do best: create opportunity.

Energy is the single most important industry in getting America back on her feet again.  And retooling the refineries here in our backyard ---the right way, for the right product, to fulfill the right vision --- is the blueprint to make that a reality.

And what a Christmas present that would be!

(Part Two will specifically examine what should be done to save the refineries and their jobs).

Chris Freind is an independent columnist, television/radio commentator, and investigative reporter who operates his own news bureau, www.FreindlyFireZone.com  His self-syndicated model has earned him the largest cumulative media voice in Pennsylvania. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it