[MNBoxster]

Hi,

The lack of Refineries is not at all the whole story. Alarmists often cite the reduction in actual refineries rather than the true reduction in capacity simply because it has greater impact to do so - the use & abuse of statistics. The information below is sourced from the EIA (Energy Information Administration), a department within the DOE (Dept. of Energy).


Between 1981 and 1989, the number of U.S. refineries fell from 324 to 204, representing a loss of 3 million bbl/d in operable capacity (from 18.6 million bbl/d to 15.7 million bbl/d), while refining capacity utilization increased from 69 percent to 87 percent. Much of the decline in U.S. refining capacity resulted from the 1981 deregulation (elimination of price controls and allocations), which effectively removed the major prop from underneath many marginally profitable, often smaller, refineries.

Refinery closures have continued since 1989, bringing the total number of operable U.S. refineries to 132 as of January 1, 2006 . In general, refineries that have closed were relatively small and had less favorable economics than other refineries in their market area. Also, in recent years, some smaller, less-economic refineries that needed additional investments for environmental reasons in order to stay in business found closing preferable because they predicted that they could not stay competitive in the long term.

While some refineries have closed, and no new refineries have been built in 29 years, many existing refineries have expanded their capacities. As a result of “capacity creep," whereby existing refineries create additional refining capacity from the same plant, capacity per operating refinery increased by 28 percent over the 1990 to 1998 period. Overall, since the mid-1990s, U.S. refinery capacity has increased from 15.0 million bbl/d in 1994 to 17.1 million bbl/d in September 2005. As of November 4, 2005, utilization of operating capacity at U.S. refineries was averaging around 84 percent, down from 91 percent on September 16, 2005 following Hurricanes Katrina and Rita. In other words, we are still not using anywhere near 100% capacity of existing refineries.

There has been a major shift in Oil usage since the early '80's. The reduction in manufacturing in the US over these years has lessened the pressure on Oil demand considerably. But, other uses have increased. We consume about 43% of all refinery production as Gasoline (relatively constant since 1981), the rest is used in Industry, Diesel, Jet Fuel, etc.

Also, many people are unaware of how our foreign oil is sourced. Our #1 source of foreign oil is from Canada (1.9 mm bpd), followed by Saudi Arabia(1.6 mm bpd), Mexico (1.5 mm bpd), and Venezuela (1.4 mm bpd). So, OPEC isn't as prominant an influence as many believe since neither Canada or Mexico are members.

What all this means is that the primary factor in Gas prices is not OPEC, or refining capacity, it's mainly demand...

Happy Motoring!... Jim'99