MONTH IN REVIEW

AND NOW, ZEROING IN ON THOSE ENVIRONMENTAL COSTS

America's oil refining industry is being strangled by environmental regulations.

• It has been more than 20 years since a new refinery was built in this country and industry experts say none will be built anytime soon, if ever.

• In the past 15 years, 130 gasoline refiners have been driven out of operation -- 33 in the last eight years.

• Some remain in business only because it would be too expensive to shut down -- the potential cleanup liabilities are too daunting.

Environmental regulations are driving up refining costs on one side, while potential environmental cleanup costs are driving down the price of refineries for sale on the market.

• It was reportedly worth $100 million to Chevron to be relieved of environmental liability when it sold its Philadelphia plant to Sun Oil in 1994.

• When Tosco corp. acquired British Petroleum's refinery near Philadelphia, it got the assets for a song.

• As major oil companies withdraw from the U.S. refining market, they are selling refining facilities for 10 percent of the replacement cost.

Most of the new money coming into the industry goes for keeping up with environmental rules and regulations -- only incidentally directed to increasing output.

In California, clean air standards that went into effect this spring require use of a more expensive gasoline blend, so it has experienced the greatest gasoline price increases -- 35 percent in the past few months. State environmental standards have devastated its oil industry.

• The state's 11 surviving refiners have invested a total of $4.5 billion to meet the new mandates there.

• Four other firms mothballed their plants, knocking 183,000 barrels a day out of production -- one-fifth of statewide gasoline consumption.

• With the industry running full-tilt just to keep up with demand, incidents such as two recent fires at major California refineries jeopardize vital supplies to consumers.

Nationwide, refineries are running at 95 percent of capacity -- up from 69 percent a decade ago.

Gasoline demand continues to grow, and there's plenty of oil to satisfy it. But since the regulatory costs of running a refinery are 25 percent lower in Western Europe and Canada -- and nonexistent in much of the developing world -- the U.S. refining industry may be heading off-shore, taking thousands of jobs with it.

Source: Holman W. Jenkins Jr., "Gas Pumps Ring Up Environmental Costs," Wall Street Journal, May 7, 1996.

MAKING WATER DEADLY

Every year, nearly 1.5 billion people -- mostly children under five -- suffer from water-borne diseases. Yet environmental activists in wealthy industrialized nations are leading a campaign to eliminate the most effective means of purifying water -- chlorination.

• An estimated 25 million people die every year from cholera, typhoid fever, amebic dysentery, bacterial gastroenteritis, giardiasis, schistosomiasis and various viral diseases such as hepatitis A -- due to contaminated water.

• In Latin America, where some cities stopped chlorination due to a suspected link with cancer and others can't afford to treat water, there have been nearly one million cases of cholera and 10,000 cholera deaths since 1991.

• Alternative chemical disinfectants such as ozone and ultraviolet light have been used in water treatment, but they are far more expensive and not as safe or effective as chlorination.

On the other hand, opponents claim chlorine compounds can cause cancer, infertility or birth defects. However, recent research indicates the increased risk of cancer from chlorinated water is minimal or nonexistent.

For example, a 1994 toxicological study found no carcinogenic effects at chlorine concentrations a thousand times higher than Environmental Protection Agency standards. And the International Agency for Research on Cancer concluded population studies on cancer rates were too flawed to draw any conclusions.

Water chlorination is just one target for some activists; they advocate eliminating some or all of the 15,000 chlorine compounds now in use. This would include most plastics, almost 85 percent of pharmaceuticals and 96 percent of crop-protection chemicals.

Yet most of the chlorine in the world occurs naturally. The annual global emission of some 1,500 naturally occurring chlorinated organic chemicals totals five million tons, compared to human emissions of chlorine compounds of only 26,000 tons.

Source: Michelle Malkin and Michael Fumento, "Rachel's Folly: The End of Chlorine," March 1996, Competitive Enterprise Institute, 1001 Connecticut Avenue, NW, Suite 1250, Washington, DC 20036, (202) 331-1010.

CHEMICAL THREATS?

Are synthetic chemicals disrupting human reproduction and development? Some environmentalists have suggested that certain man-made chemicals in the human diet might be causing lower male sperm counts. These chemicals, called endocrine disrupters, mimic or affect hormones involved in reproduction, such as estrogen.

A new study reports that there are naturally-occurring substances in the human diet that are far more potent endocrine disrupters than the synthetic compounds most identified with reproductive health concerns -- such as DDT and PCBs.

• More than 43 plants and foods found in the human diet have been shown to have weak estrogenic effects.

• These foods include garlic, pineapple, peanut oil, oats, soybeans, peas, potatoes, corn and wheat.

• The effects of the compounds in these foods are an estimated 40 million times greater than those from synthetic chemicals in normal human diets.

• Tests on plants have also found 31 species of plants and 55 chemical compounds that inhibit the production of sperm in animals, but only a handful -- cottonseed oil is one -- are found in the human diet.

Effects on reproduction have been observed outside the laboratory when a large part of the diet consists of a food containing unusually high levels of a natural endocrine disrupter. For example, in the 1940s, many Australian sheep became infertile from grazing on a species of clover that produces estrogen-like chemicals.

Most claims about lower human sperm counts are from a now discredited statistical study; while U.S. data collected from 1938 to 1977 shows no decline in sperm counts, and there is evidence that counts have actually increased in the last 25 years. Also, U.S. rates of infertility have remained constant for 30 years. Thus the evidence to date is that neither natural nor synthetic compounds in food are threatening human reproductive health.

Source: Jonathan Tolman, "Nature's Hormone Factory: Endocrine Disrupters in the Natural Environment," March 1996, Competitive Enterprise Institute, 1001 Connecticut Avenue, NW, Suite 1250, Washington, DC 20036, (202) 331-1010.

SUPERFUND MESS

Superfund was meant to be a short-term program to clean up dangerous hazardous waste sites like Love Canal -- paid for mainly by those who caused the pollution. After 15 years, cleanup is proceeding slowly, at an enormous cost, and litigation plagues the program.

A recent study of the program administered by the Environmental Protection Agency (EPA) concludes that President Clinton was correct in stating, "Superfund has been a disaster."

• At the end of 1995, 91 sites had been cleaned up, but 1,374 sites remained.

• Since 1980, the EPA has spent $14.9 billion, and private companies are now spending an additional $1.3 billion to $1.4 billion per year on Superfund cleanups.

• In 1992, EPA reported that its overhead costs alone in 1988 averaged more than $328 per hour of work by each employee of site-cleanup contractors ($410 in 1994 dollars).

• A Rand Corporation study found legal and other transaction costs accounted for 32 percent of total expenditures.

In addition, the extraordinary liability standards set by the Superfund law holds firms with only minor involvement liable for unlimited costs. But the firms billed for cleanups have little chance to defend themselves, since they can be assessed treble damages if they lose a court challenge to EPA's Superfund decisions.

Even those the program is supposed to help are harmed, since designation as a Superfund site causes property values to fall and dries up financing for redeveloping sites.

Critics suggest the program's failure is due to its design. For example, determining the risks posed by waste sites, the extent of the cleanup needed and the technology to be used are up to the EPA, not an objective party. Also, since EPA Superfund activities are financed by special business taxes, its spending isn't limited to congressional appropriations. And under federal law, agency cleanup decisions can only be challenged in court if they are arbitrary or capricious, not unreasonable or unnecessary.

Superfund's critics recommend a completely different approach: a return to common law principles that would require more definitive standards for actual or potential harm, allow flexibility in cleanup and settling claims and protect the legal rights of accused parties.

Source: Richard L. Stroup, "Superfund: The Shortcut that Failed," PERC Policy Series Issue No. PS-5, May 1996, Political Economy Research Center, 502 South 19th Avenue, Suite 211, Bozeman, MT 59715, (406) 587-9591.

"GLOBAL WARMING" THEORISTS SKATING ON THIN ICE

Climatologists who have studied the history of the earth's temperatures as far back as the 12th century -- by examining tree rings and records of crop growth -- say warming and cooling trends have see-sawed up and down for centuries. The cause of the fluctuations is much more likely due to weather cycles, shifting ocean currents and solar radiation than to industrial carbon dioxide and chlorofluorocarbons. This research helps to dispel the sometimes hysterical warnings of those who have been telling the world for years about the dangers of "global warming."

According to a new book, "The Global Warming Debate: the Report of the European Science and Environment Forum," compiled by a pan-Atlantic panel of 27 researchers, mean global temperatures have risen only 0.9 degrees Fahrenheit since 1920.

Here is further evidence to debunk "global warming":

• European summer temperatures were higher in the 1940s than they are today -- higher than at any time since the 1790s, according to a German researcher.

• One measurement of European summer temperatures from 1780 to 1989 zigs and zags like the readout of an electrocardiogram.

• Studies of wood from Scandinavian forests reveal that trees grew about 215 feet above the current pine tree line as recently as the 12th Century, suggesting a much warmer climate then.

• And then there is the evidence that higher temperatures permitted wineries to thrive in northern England during the Middle Ages.

There's even a note for those who label industrial output as a cause of global warming. As the Industrial Revolution swept Europe in the 19th century and all those smokestacks started belching, temperatures plunged dramatically.

Finally, few who survived the winter of 1995-96 in the U. S. northeast will greatly concern themselves with theories that everything is getting hotter.

Source: Deroy Murdock (Atlas Economic Research Foundation) "You Call This Global 'Warming?'" Washington Times, May 31, 1996.