It will be bad news for Hawaii if Tesoro follows through with its January announcement that it will close its refinery in Kapolei, turn it into a terminal and lay off the vast majority of the 250 local people who work there.
Tesoro is doing this even though its own financial reports say the refinery is making money and that Hawaii is one of its lowest-cost units.
The community impact will be far greater than the direct, family-supporting jobs lost at the refinery. Contract employees who work at the refinery will be affected. Businesses that supply equipment and parts to the refinery will see a decrease in orders or will shut down. Studies estimate about 10 of these indirect jobs will be eliminated for every family-supporting refinery job lost. The total impact easily could be 2,000 jobs or more.
These workers aren’t just numbers; they are our friends, our family and our neighbors. And the ripple effect will continue to affect other businesses, including restaurants and grocery stores, as these affected workers curb their spending.
But that’s not all. Hawaii is unique among Pacific Island jurisdictions because it is self-sufficient in liquid fuels. The two refineries supply just about all of the state’s needs. Because of this, gasoline and diesel prices are close to $1 per gallon lower than in other parts of the Pacific that use the U.S. dollar.
Residual fuel, the kind used by most of Hawaii’s power plants and by ships that call at our ports, sells for about $90 per metric ton more than the general global price when it is imported into Pacific Island jurisdictions.
National security also could be affected. The U.S. Navy depends on Tesoro for about 70 percent of the fuel it uses in Hawaii. Is it really a good idea for our armed forces here to be depending on imported fuel that could be cut off in the event of a crisis?
All of this is important because if the Tesoro refinery closes, our state will have to import more than half of the petroleum products it uses. If that happens, prices are almost certain to rise to a rate much closer to those typical in Pacific Island locations where there are no refineries. No one is going to give Hawaii a discount over what nations and territories in the rest of the Pacific must pay.
Some people say natural gas will be the solution to our problems. But Hawaii does not have the gas terminals it would need to import this fuel. Our state’s power plants will need years to get ready for gas. And there are enormous environmental problems with the hydrofracking technology used to drill for the gas we would want to use.
Other people say that wind and geothermal energy will be enough, but these technologies are even many more years away.
This means that if Tesoro closes its doors, Hawaii will face an energy crunch, and it could take several years to recover. Also, there will be fewer decent-paying jobs, as well as higher fuel prices for not just motorists but also for trucking companies and other commercial businesses, and for the plants that supply our homes with electricity. The visitors who are so important to our economy will face higher prices as well.
For all these reasons, it is important to our state that the Tesoro refinery remains open. Business leaders, the governor and state and federal officials, labor and concerned citizens must work together to make sure this essential part of Hawaii’s economy is not lost. Through our collective efforts, the refinery can be saved and a nasty shock to our economy and quality of life avoided.
