3 ms·
U.S. refining capacity is running at 100%. You can add as much oil to the supply as you want - we can't refine it. Several refining facilities have been retired
by taylodl 4y ago
U.S. refining capacity is running at 100%. You can add as much oil to the supply as you want - we can't refine it. Several refining facilities have been retired over the past 10 years as they've hit and-of-life. No one is interested in building new refineries because it's capital-intensive and requires a 50-60 year lifetime to achieve desired income. Many European countries have banned the sale of ICE vehicles by 2035, so why would you invest in more refining capacity in 2022? Not only that, but if you make the capital investment to increase refining capacity the result will be lowering the price of your product. That new refinery will never pay for itself, let alone be profitable.
Why the dramatic rise in gas prices? Two-fold - refineries were end-of-lifed during the pandemic, which reduces supply, and then the lockdowns were lifted when the Covid vaccines became widely distributed, which had the result of increasing demand. Reduced supply + increased demand = higher prices. Throw in the Ukrainian War which has introduced uncertainties in the global oil market and so you have raw material costs increasing as well.
- WillPostForFood 4y agoNo one is interested in building new refineries But they are interested in expanding existing refineries and have been blocked by the White House. https://www.reuters.com/article/us-usa-refinery-pollution/biden-white-house-blocks-virgin-islands-refinery-expansion-permit-over-pollution-concerns-idUSKBN2BH2OP https://www.reuters.com/article/us-usa-refinery-pollution/bi...
- taylodl 4y agoThat seems pretty disingenuous to me, TBH. Article to your linked article it's not an issue of the refinery's owner wanted to increase capacity and the White House said no. It's an issue of a refinery already experiencing environmental issues wanted to expand and weren't addressing the existing outstanding issues. Also, I find it curious the refinery in question is located in the U.S. Virgin Islands. I could be completely wrong but I would guess that refinery is producing refined products for export and not serving the U.S. domestic market. In another vein, it's interesting too that U.S. gasoline exports to Mexico and Latin America have risen to record levels. It's almost as if we're not a Socialist country and we can't tell those companies to supply that gas to the domestic market to help drive prices down.