Shrinking refinery capacity effecting delivery of US oil

Houston Chronicle:

At midnight on April 11, a 940-foot tanker maneuvered into the dock at the oil terminal in Valdez, Alaska, carrying an unusual cargo for a returning ship.

Sloshing in its tanks were more than 12 million gallons of Alaskan crude, at least a quarter of the cargo the ship had carried away from Valdez two weeks earlier.

The Alaskan Explorer had sailed to a Washington refinery but was forced to return to Alaska with 300,000 barrels because the onshore storage tanks were too full to accept it, confirmed Anil Mathur, CEO of the Alaska Tanker Co., which owns the ship.

"Not the normal course of business," said John Kotula, one of the few outsiders privy to the incident because of his position as manager of the state of Alaska's environmental office in Valdez.

The tanker's inability to offload its oil underlines a startling reality: Stocks of crude oil in the U.S. have been for the last two years at historic highs, while Americans are using decreasing amounts of its most important product - gasoline.

But federal statistics show another recent development: West Coast refineries are decreasing their production as the domestic demand for gasoline shrinks.

"If there is so much crude oil around, why is the price of gasoline so high? Why is the price of heating oil so high?" asked Dan Lawn, an environmental consultant who was in the same job as Kotula for decades before he retired in 2005.

The BP refinery in northern Washington had been shut down due to a February fire when the Alaskan Explorer arrived there on April 6. But that doesn't explain the tanker's return to Valdez with a big load of oil. Refinery spokesman Bill Kidd acknowledged that in normal times, the ship would have offloaded the remainder of its cargo at one of three nearby refineries.

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I suspect the problem is that the new EPA rules have closed refineries in several parts of the country and made affordability an issue in a decision to build new ones.  We still need to pursue more domestic production of oil.  It is better to spend the money here than elsewhere at this price.  It boost the domestic economy and helps our trade balance.

The West Coast has less refining capacity because the Big Green lobbies have made it impracticable to expand or build new facilities, as have the previously mentioned EPA rules.