“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.
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.
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 Cheney 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 Sept. 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.