Another Pa.-sponsored taxpayer fleecing

Another Pa.-sponsored taxpayer fleecing

The Philadelphia Energy Solutions refinery is closing after a devastating fire. And as an Energy in Depth blog post reminded in late June, that marks “a fiery conclusion to years of financial duress.”

For the refinery’s owners, perhaps. But the sting for Pennsylvania taxpayers won’t so easily be erased from memory.

The refinery, whose operations date to just after the Civil War ended, had “been rescued repeatedly in the past decade by a private investor, government assistance and a bankruptcy court as its managers tried to maneuver through a radically shifting oil market,” the blog noted.

“Government assistance,” of course, is the euphemism of choice for those receiving what it was – a massive taxpayer bailout. As The Philadelphia Inquirer recounted, the refinery received $25 million in state taxpayer grants since 2012.

Much of that money, state officials say, likely is not recoverable.

There was another grant of $10 million from the Pennsylvania Department of Transportation for rail line work that may or may not have been done to specifications.  PennDOT reportedly is trying to determine if any of that money is recoverable.

And there’s a report (from Philadelphia’s NBC10) that the refinery settled $3.8 billion ­– that’s billion with a “b” – in state tax arrearages for $86,000. Don’t try this at home; after all, these cats, on both sides, are professionals.

Oh, and the City of Philadelphia reportedly sought $232,000 in back taxes for 2015-16; it’s unclear what, if anything, it recovered.

Of course, this was lousy public policy from the get-go, not simply because the long-troubled Philly refinery went belly-up. Taxpayers had absolutely no business being turned into venture capitalists by government “leaders” masquerading as junior economists.

Remember all that grand talk of such an “investment” creating the multiplier effect of all multiplier effects? Never mind that government interventions to end all government interventions most assuredly lead to “The Subtraction Effect” – that proclamation of “everybody will win” leads to everybody losing.

The Philly refinery debacle also raises an ancillary question that we’re sure too few, if anyone else, have broached:

Did the state Public Utility Commission block attempts to reverse the flow of the Laurel Pipeline – that would have brought cheaper gasoline into the Western Pennsylvania market from the Midwest — in a perverted attempt to further subsidize (with regulatory protectionism) a refinery that, well before the fire, had struggled to be competitive and, by all economic indicators, should have gone out of business?

Finally, Tribune News Service, reporting on the Energy Solutions mess, said “the question of when it is effective to direct public resources to private companies is a complicated one.”

No, it’s not complicated at all. The correct answer is never. As this misguided Philadelphia story illustrates.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).