John's Blog

Joe Barton likes herring....red herring

These days it seems like you can't turn around without hearing one of Joe Barton's favorite talking points - it goes something like this - "Gas prices are high because we don't have enough refinery capacity. Environmental regulations have prevented any new refineries from being built in the last 25 years. Therefore, we need to relax environmental regulations on refineries to bring the price of gas down."

Sounds pretty reasonable right? Well how well does it actually stand up to the facts?

In 1980, there were 320 refineries in the US.
In 2001, there were 150 refineries in the US.

Logically, if environmental red tape was the reason for new refineries not being built, we'd expect industry to hang on to existed permitted facilities and to expand capacity at those facilities. This is exactly what the nuclear power industry did after the Three Mile Island accident made new permits politically untenable. And in fact, from 1980 to 2001, the average capacity of each US refinery did increase from 100,000 barrels/day to 250,000 barrels/day.

But the fact remains that industry still shut down over 50% of refineries to shed excess capacity. Excess capacity is bad for day to operations, and the market is good at reducing excess capacity but when you don't have that cushion, natural disasters cause price spikes.

Since 1995, refinery closures have taken more than 830,000 barrels/day of US refinery capacity offline.

Refineries closed since 1995:

* 1995 - Indian Refining - Lawrenceville, IL
* 1995 - Cyril Petrochemical Corp. Cyril, OK
* 1995 - Powerine Oil Co. Sante Fe Springs, CA
* 1995 - Sunland Refining Corp. Bakersfield, CA
* 1995 - Caribbean Petroleum Corp. San Juan, Puerto Rico
* 1996 - Tosco Marcus Hook, PA
* 1996 - Barrett Refg. Corp. Custer, OK
* 1996 - Laketon Refg. Laketon, IN
* 1996 - Total Petroleum, Inc. Arkansas City, KS
* 1996 - Arcadia Refg. & Mktg. Lisbon, LA
* 1996 - Barrett Refg. Corp. Vicksburg, MS
* 1996 - Intermountain Refg. Co. Fredonia, AZ
* 1997 - Gold Line Refg. LTD Lake Charles, LA
* 1997 - Canal Refg. Co. Curch Point, LA
* 1997 - Pacific Refg. Co. Hercules, CA
* 1998 - Gold Line Refining Ltd. Jennings, LA
* 1998 - Petrolite Corp. Kilgore, TX
* 1998 - Shell Oil Co. Odessa, TX
* 1998 - Pride Refg. Inc. Abilene, TX
* 1998 - Sound Refg. Inc. Tacoma, WA
* 1999 - TPI Petro. Inc. Alma, MI
* 2000 - Pennzoil Rouseville, PA
* 2000 - Berry Petroleum Stephens, Ark.
* 2000 - Chevron Richmond Beach, WA
* 2001 - Premcor Blue Island, IL

The facts just don't back up the claim that regulations have stopped new refineries from being built, because, if industry had really needed/wanted that capacity, they wouldn't have chosen to shut down over half of operational refineries in the last 25 years and taken almost a million barrels a day out of operation since 1995.

It's an anti-environmental red herring, and Joe Barton wants us to swallow it hook, line and sinker.

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