John's Blog

Deconstructing a story in the Washington Post

So the Washington Post has an excellent article on refinery production, European diesel usage and the potential for diesel to increase US fleet economy. The author concludes that a shift toward diesel cannot help US consumers because refineries lack spare capacity to shift from gasoline to diesel production.

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/07/AR2005080700888.html

The article is extremely well written. In fact, it is so well crafted I didn't recognize it for the blatent piece of propoganda it is until the last paragraph. Until that point, I found myself reading along and thinking "okay, good point" or "that's a valid point, but what about biodiesel?" In short, it looked so reasoned and balanced that I figured his ignoring the potential of biodiesel was just an oversight.

Then I hit the last paragraph, which turns out to be a disinformation goldmine:

Give U.S. refiners about 10 years and they might significantly increase diesel production capacity. It would take about that long to plan new projects and run the regulatory and litigation gantlet. Until then, a motorist buying one will have to compete for expensive diesel fuel in an increasingly tight market. In the meantime, diesels do not increase American motorists' practical choices. If the energy bill had given us new sources of diesel fuel, it might have done some good. As it is, that $3,400 tax credit could just tempt Americans to make a mistake.

There are 2 *major* problems buried in this paragraph.

First, given market economics, if US demand for diesel were to spike, new sources would enter the market. Biodiesel is possibly the best example of a substitutable good I can think of. And a biodiesel plant certainly doesn't need 10 years of permitting to come online. If diesel demand were to spike, biodiesel (or at a minimum, biodiesel blends) would certainly increase their marketshare as a means to meet this pent up demand.


Second, notice the part I put in italics. If that isn't a coded call to open up ANWR to drilling, I don't know what is. Given that the author is chair and CEO of
Poten & Partners, Inc, 75 year old petroleum brokerage/energy consulting services firm, are you suprised that he and his clients would rather pretend that biofuels aren't waiting in the wings as a potential solution?

I'd bet my left kidney he's read the report the Economist did on the competitiveness of renewables, yet he doesn't even bother to dismiss biofuels. Instead, his editorial sounds balanced while depending on the ignorance of the Washington Post's readers.

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