In a speech Wednesday at the National Small Business Conference in Washington, President Bush proffered the idea of converting closed military bases into oil refineries. He promised to "direct federal agencies to work with states" to spur refinery-building and "to simplify the permitting process for such construction."
The president didn't get to the specifics, saying only that refinery construction "will help assure supply and reduce dependence on foreign sources of energy." He also made a much-needed call to revisit the issue of nuclear power to meet the country's energy needs. To the extent that the base-to-refinery option is viable from a business standpoint, the politics and the economics are both intriguing.
Politically, base-closure has been acrimonious since 1977, when Congress began requiring the secretary of defense to submit closures and realignments for its approval. The move won't end the haggling in Congress, but it promises that localities will at least look a little harder at a refinery option. The Pentagon has success stories in the new airports, industrial parks and commercial spaces springing up on old military bases in the last two decades. Communities that say NIMBY-- not in my back yard -- won't be as justified blaming Washington for job losses or business closures if they turn their noses up at a refinery. In a few weeks, when the Pentagon releases its preliminary base-closing list, the haggling will begin.
Economically, the proposal adds a small but welcome element to the energy-policy arsenal. As a matter of national policy, the president's May 2001 energy policy cites refining capacity as an area of concern, and it's not hard to see why. The nation has fewer than half the number of refineries it did in the early 1980s, and capacity has stagnated despite the upward spiral of oil prices. Refining remains one of the less-profitable segments of the oil business. Regulatory holdups are among the reasons refiners don't build new facilities. If Washington can help refiners increase capacity, that's a proper use of energy policy.
No one is expecting the base-to-refinery plan to solve the nation's energy woes, of course. But it will complement Mr. Bush's existing energy initiatives in a time of rising oil prices and an unseemly dependence on foreign energy sources.