I've kept my mouth shut on this for a while, because the issue is needlessly devisive. From the Associated Press.
Oil companies and other investors are spending a collective $100 billion on new oil refineries that could alleviate the current bottleneck in refining capacity — and eventually translate into a small cut in the price of gasoline...
People complain about the price of gasoline, and try to blame the oil companies. It's not that simple.
One of the biggest factors in the price of oil, and consequently the price of gasoline is refinery capacity.
"Right now refining is maxed out," (global head of project finance for Standard Chartered Bank, Will) Rathvon said on the sidelines of a Middle East energy conference. "At this point, the shutdown of a single refinery — even for maintenance — can trigger an increase in gasoline prices."
Politicians and extreme environmental groups (no one is for damaging the environment) have seen to it that no new refineries have been built in the US in roughly 30 years. Demand has increased but the ability to process more oil, faster, has not.
Refineries in fuel-thirsty Asia are operating at a frantic 95 percent capacity, Rathvon said. In North America and Europe, refineries are also running at over 90 percent capacity, he said.
"Running that tight has put prices up," Rathvon told The Associated Press.
So, increasing refining capacity would be a huge relief for businesses of all stripes, especially those that rely heavily on fuel.
Of course, so would government gasoline tax reductions. The government "made" almost twice as much as the oil companies did last year! But that's for another post...
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