THE SMALL OIL refineries are now organizing a post-election raid on Congress, intending to seize more and fatter federal subsides. The small refiners represent the spirit of free enterprise with the same ivgor and enthusiasm that the Barbary pirates did. When oil price control and allocation rules expire next fall, a couple of extremely valuable -- and utterly unjustified -- preferences for small refiners will vanish with them. Their trade organization, the American Petroleum Refiners Assocation, announced this week that, to educate Congress, it is raising a lobbying fund to $100,000.
The size of that fund is implausibly small. The press release seems to have got the decimal point in the wrong place.It would be positively stingy of the small refiners to lay out such a meager amount of money for the huge tax breaks that they are now demanding.
According to the small refiners, they are an essential force to ensure competition in the American oil industry. According to them again, no price is too high to keep them propped up in the battle with the big companies. Still, according to them, you should stop whining about the rate at which small refiners get rich at your expense; you should instead be grateful that those brave little refiners are in there keeping the markets fair and free.
In fact, the 65 companies that are the small refiners produce about 5 percent of the country's oil products. They are irrelevant to the degree of competition in the oil business. These refineries are all far too small to be economical. They have survived only through political pull and artful manipulation of legislation.
The small refiners, by act of Congress, are currently exempt from certain equalization payments that other refiners have to pay when they use cheap price-controlled oil. At the same time, the small refiners have a legal right to that cheap oil through the allocation rules. When those provisions expire next October, the small refiners will have to bid for oil like everybody else. n
If they were really worried about access to crude oil, they might better use their $100,000 to form a joint buying organization. Many small and medium-sized oil companies now buy directly from producers in successful competition with the big refiners. The small refiners could also use some of their large profits to consolitdate and improve their inefficient plants. They aren't likely to do that. They prefer the present, more comfortable practice of federally guaranteed profitability. But Congress has no business inventing new subsidies for inefficient businesses, merely bcause it has unwisely subsidized them in the past.