Are U.S. Oil Refineries Prepared for Climate Change?
by Amanda Starbuck, 3/2/2015
It’s been a bad month for oil refineries. The nationwide strike against unsafe working conditions and other unfair labor practices is in its fifth week, with more than 7,000 workers participating. Two weeks ago, an explosion at a Los Angeles refinery demonstrated the validity of the United Steelworkers’ health and safety concerns, injuring four workers and raining ash on surrounding neighborhoods.
Now a new report from the Union of Concerned Scientists suggests that refineries and the communities near them face yet another unaddressed risk: climate change.
Many U.S. refineries are located in coastal communities: this includes 69 major oil refineries and an additional 50 oil and gas storage facilities. Climate change is causing rising sea levels and more extreme storms, including more intense hurricanes. These conditions allow storms to reach further inland, causing enormous destruction to coastal development – including oil refineries.
Climate Change Danger: Refineries in the Heart of the Storm
*To view map in full size, click here.
Damage to refineries can result in toxic chemical leaks that threaten ecosystems and public health. Physical damage to facilities can also disrupt economic production and lead to higher gas prices.
We are already seeing such impacts. The Meraux refinery in Louisiana was damaged during Hurricane Katrina, leaking 25,000 barrels of oil and contaminating over a square mile of a local neighborhood. More recent hurricanes have halted oil refining, hurting the local economy and causing surges in gas prices.
Oil companies are failing to disclose the risks climate change poses to their refining operations.
In response to shareholder pressure, the U.S. Securities and Exchange Commission (SEC) issued a guidance document in 2010 recommending that all publicly traded companies disclose to their investors the potential impact that climate change could have on “personnel, physical assets, supply chain, and distribution chain.” Most companies have ignored this guidance.
The Union of Concerned Scientists report examined the SEC filings of the five major oil refining companies operating in the U.S. and found that only one company even mentioned climate risks. Valero Energy Corporation operates seven refineries on U.S. coasts, Phillips 66 operates five, Exxon Mobil Corporation operates four, Marathon Petroleum Corporation operates three, and Chevron Corporation operates four near-coast refineries. Only Phillips 66 disclosed any physical climate risks in its SEC filings.
Oil refineries contribute significantly to climate change but are not working to reduce those impacts or to make their facilities safer in the face of rising sea levels and more violent storms.
The first step in oil companies taking responsibility for reducing the risks they create for local communities is admitting they exist. This means analyzing potential climate change impacts and then preparing for them accordingly. Companies should be transparent about the risks from these facilities so that local communities can also be prepared to deal with them.
And it is time for the Securities and Exchange Commission to move from guidance to a rule requiring companies to disclose these risks so that investors and the public are fully aware of the potential financial and human risks of their businesses.
Communities living near refineries already face polluted air and the risk of catastrophic accidents from the everyday operation of these facilities; more volatile weather increases the probability that such catastrophes will occur. Disclosure of these risks will be a step toward acknowledging the real costs of fossil fuel production and the urgent need to shift to renewable energy sources.
Photo by Walter Siegmund, used under a Creative Commons license.