Growth in refinery capacity stymied by Dem energy bill

Houston Chronicle:

Oil refiners may reconsider plans for some refinery expansion projects in 2008 in response to new energy legislation that could reduce gasoline use in coming years, industry groups and refiners say.

While expansion projects already under way won't be affected, those in the early planning stages could be delayed or canceled, they said — continuing a pullback that began last year amid rising costs for refinery additions and uncertainty over future gasoline demand.

Within 10 years, U.S. refiners could be producing less gasoline than they are today as a result of the new energy legislation, which calls for stricter auto gas mileage standards and more ethanol output, said the National Petrochemical and Refiners Association, a trade group in Washington.

If that's the case, "it doesn't really make sense for refiners to spend billions of dollars expanding to meet a demand that's not going to be there," said Bill Day, spokesman for San Antonio-based Valero Energy Corp., the nation's largest refiner.

But industry critics say refiners are using new energy policies as an excuse to keep refining capacity tight and their profits high. They claim refinery additions will still be needed to feed growth in gasoline and demand, as well as bridge a shortage in refining capacity today that is being filled by gasoline imports.

"Even as the legislation is implemented, we will have a shortfall of refining capacity for the entire lifetime of those specific energy goals," said Mark Cooper, director of research at the Consumer Federation of America in Washington.

While a new U.S. refinery hasn't been built in three decades, U.S. refiners have been expanding facilities in recent years to keep pace with fuel demands and to take advantage of one of the most profitable periods in the industry's history.

Early last year, refiners were so confident their winning streak would continue that they told the Energy Department they planned to add 1.6 million barrels per day of new refining capacity, an increase of about 10 percent and enough to produce an additional 37 million gallons of gasoline every day.

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We do need the additional refinery capacity. But the problem with the Democrat approach to energy is that there may not be enough crude to refine. Their hatred of energy production is keeping drillers from looking for new fields in the most productive areas because of ridiculous concerns about the environment in those area. I happen to live in an area where there has been significant oil and gas exploration and I can tell you for a fact that the drillers are good stewards of the environment and we have had no problems with their efforts. The Democrat hatred of energy production is a danger to US national security.