With Hawaii facing the prospect of losing both its oil refineries, Gov. Neil Abercrombie issued an executive order this week creating the Refinery Task Force.

The 29-member group, comprised of oil company and utility representatives, government officials, union leaders and clean energy advocates, will assess the potential impacts the closures could have on Hawaii’s energy security and ability to obtain affordable fuel supplies.

But the task force’s size and diverse makeup could impact its ability to be effective.

“Because it’s all-inclusive, when it comes to recommendations it could be a tough job because there are different sorts of interests and so there will be different opinions,” said Kang Wu, a senior advisor at Honolulu-based Facts Global Energy, a consulting firm.

Gaining needed financial information from the refineries could be challenging, too.

“There’s not much visibility into the refinery ecosystem because much of the information is proprietary and confidential,” said Richard Lim, the director of the Hawaii Department of Business, Economic Development and Tourism, who will chair the group. “So it’s incumbent on members that represent the industry to provide us with the requested information. Much of the information we have is confidential. For instance, what is the impact on prices — that is very proprietary and we don’t have the authority to demand the information.”

Refineries Struggle

Tesoro and Chevron produce nearly all of the fuel used to power the state’s electricity and transportation needs, according to data from DBEDT.

The companies import crude oil and refine it into a variety of products, including diesel, gasoline, jet fuel and low sulfur fuel oil, which is then sold at the pump, used in the electric utilities’ generators and supplied to airlines and shipping companies.

But Tesoro announced last month that it’s closing its Kapolei refinery in April after a year-long, unsuccessful search to find a buyer for its facility.

This leaves Chevron as Hawaii’s sole refinery. Last month, Fereidun Fesharaki, an oil expert and fellow at the East-West Center predicted that Chevron would also close its Hawaii refinery in the next couple of years.

The refinery is facing several economic challenges that could impact its future profitability, including stricter environmental controls and a state policy mandating a switch to more renewables and a major reduction in overall electricity use. The Abercrombie administration has also backed imports of liquefied natural gas as a replacement for oil.

For now, Chevron says that it’s committed to the Hawaii market.

“Chevron has been in the islands for over 100 years,” said Albert Chee, a spokesman for Chevron. “It is our intention to be here as long as it makes sense to be here.”

Still, Chee said that the refinery’s profitability has eroded over the years.

Experts Disagree on Impacts of Closures

The governor’s task force is responsible for figuring out what impact the loss of one or both of the state’s refineries will have on the security of the state’s fuel supply and consumer prices.

DBEDT will convene up to six meetings between now and early next year, according to the state energy office, which is requesting $145,000 from the state Legislature to support the group.

For now, not everyone even agrees on whether Hawaii residents will be affected at all.

Chee said that if both refineries close, fuel prices in Hawaii will likely go up.

“The fact that you have refineries on the island would have to mean that it is cheaper to refine gasoline in Hawaii than it is to import it,” he said.

But other oil experts say that the loss of the refineries will have little impact on consumer prices, though it could increase the state’s vulnerability to major disruptions in the global oil market. Hawaii will have to begin importing large amounts of refined products.

Wu, the energy consultant, said that prices for oil refined in Hawaii are already tied to the import market. He said prices might even dip if there is an increase in competition among local importers.

The task force is supposed to serve as the main advisory group on matters related to the refineries. It’s required to submit reports and recommendations to the governor, including an assessment within 60 days of a refinery’s closing.

Lim said that the success of the group will ultimately depend on the participation of its members. He said it was hard to limit the size.

“That is your ecosystem and it’s hard to exclude anyone,” he said.

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