Posted on 07/21/2006 11:36:57 PM PDT by Republicain
NEW YORK (AFP) - Despite record profits, US oil majors have built no new refineries on American soil for 30 years, raising the country's dependence on foreign supplies and making it vulnerable to even small accidents and bad weather.
Standing in Garyville, Louisiana, the Marathon Oil refinery is the most recently built refinery in the United States -- and that was in 1976.
Since then, the number of US refineries in operation has dropped by more than half, from more than 300 in the early 1980s to less than 150 today.
And while these refineries' capacities may have increased in recent years through the units' expansion, they still fail to satisfy the voracious appetite of US car drivers and industry for oil.
Further, the damage to refineries from hurricanes Katrina and Rita last summer has highlighted this bottleneck in the American oil industry.
Since then, each minor accident or production gap caused by maintenance problems has led to jumps in gasoline (petrol) prices at the pump, and by extension crude oil prices.
And following the recent introduction of new environmental standards for the makeup of gasoline, the US government ironically might contribute to the prospect of local shortages this summer.
Such a state of affairs has sparked public ire at a time when US oil giants are setting record profits while gasoline prices keep rising.
In a June article, The New Yorker weekly argued it was "rational" for oil refiners to seek production limits so that prices, and profits, continue to go up without the huge additional investment cost required by new refinery construction.
But energy sector analysts dispute this view, arguing that one of the main obstacles facing potential new refineries was the NIMBY ("not in my back yard") factor, where the public would lobby local governments against opening up such massive, and polluting plants where they live.
"They want the gasoline but they don't want the refinery," said WTRG Economics analyst James Williams.
And coupled with rigorous local environmental standards, it becomes even more difficult and expensive for a company to win construction permits for new plants, Williams said.
For example, a proposed new refinery for the southwestern state of Arizona, launched in 1999, has still to get off the ground and would be completed no earlier than 2011, the American Petroleum Institute (API), an oil industry lobby group, said.
"It's very costly to build new refineries," said Jason Schenker, an industry analyst with Wachovia.
It requires "huge capital investment, and over time they are not always profitable," Schenker said.
API estimates that a new refinery would require up to seven billion dollars of investment, which would take at least five years to complete, locking down possible profits.
The result: refiners are starting to build elsewhere -- in China, India, or the oil-producing countries where construction is easier logistically and cheaper, while the United States becomes more dependant on foreign suppliers.
Since the early 1980s, US gasoline imports have grown six-fold.
This leaves the country in a strategically delicate situation and susceptible to foreign tensions, which can play havoc on oil prices as witnessed by the recent upsurge in Middle East violence, analysts said.
"The more refineries are some place else, the more subject you are to the geopolitical events that we see moving crude prices," said Williams.
Another industry moved off shore to easier regulatory areas....see the growth of refineries in the Carribean, Singapore and the worlds largest going up in India,.
Animal Farm had better leaders than the smucks across the board we have in power today.
I read that 1/4 of the US total refining capabilities is located on the texas coastline.
Talk about a potential disaster.
This is garbage.
US gasoline, at the refinery,is the most expensive in the world.
The reason is federal law.
Imports are difficult, because of the fragmented US market.
goofy gasoline map by county, warning, big file 2.8 meg pdf.
http://www.exxon.com/USA-English/Files/US%20Gasoline%20Map%20100102.pdf
high refinery margins, 700 K pdf, top graph, page 15
http://www.opec.org/home/Monthly%20Oil%20Market%20Reports/2006/pdf/MR072006.pdf
The Garyville refinery also has on its grounds the San Francisco Plantation restoration. If you're ever in the area I recommend you take the tour, it is magnificent. I'm assuming it survived the hurricane, most in the area did.
And you would never know this tourist attraction is in the middle of an oil refinery. Unless someone told you. I didn't know until after my visit. No pollution or smells. Today's technology is amazing.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.