Coverage of petroleum sector greenhouse gas emissions under climate policy
The petroleum sector, which includes the production, import, processing, transportation, and distribution of crude oil and refined products such as gasoline, heating oil, diesel, propane, and jet fuel, is a significant source of U.S. greenhouse gas (GHG) emissions. Recent GHG cap-and-trade proposals have covered petroleum-related emissions by placing the point of regulation at the petroleum refinery or point of import of refined products. Consumption of most finished petroleum products is already subject to a fuel tax. One alternative to regulating GHG emissions from petroleum at the refiners and importers is to regulate the same entities currently responsible for paying taxes on petroleum products and to apply other measures for regulating emissions from fuels not already subject to a tax. Another option for the point of regulation for this sector is upstream at the producer and importer level. This paper provides an overview of the petroleum sector, identifying the key entities and associated facilities in the petroleum supply chain. There is also information on GHG emissions from the petroleum sector, a summary of which emission sources are currently subject to a fuel tax and which are not, and an evaluation of the implications of adopting an alternative point of regulation for GHG emissions from petroleum.