NCPA - National Center for Policy Analysis

GREENS ARE NOT FOR GAS

May 24, 2004

The last time an oil refinery was built in the United States was 1976, thanks largely to the Not-In-My-Backyard (NIMBY) syndrome cultivated by an environmental movement that has successfully anathematized all things chemical and carbon, says columnist Tom Bray.

But even if oil supplies could be suddenly expanded, refiners would have a tough time churning out more gasoline, says Bray:

  • In 1981, according to the National Petrochemical and Refiners Association, 321 refineries pumped out 18.6 million barrels a day of gasoline.
  • Today only 149 refineries, run by 60 companies in 33 different states, pump out 16.8 million barrels of gasoline daily -- almost 2 million barrels a day less.
  • They are operating at 93 percent of capacity, well above the industrial average, with little time left for maintenance and upgrades.

Environmental regulations also amount to a tax, explains Bray:

  • Direct state and federal gas taxes are heavy enough, amounting to a quarter of the cost of a gallon of gas.
  • Crude oil accounts for less than half the price of gasoline, refining 19 percent and distribution and marketing costs 11 percent, according to the U.S. Energy Information Administration.
  • But the national refinery association estimates environmental regulatory costs came to about $47 billion over the past 10 years, enough to build quite a few refineries.

In a few years, vast new oil reserves will come on stream in Central Asia and elsewhere. But if the United States continues making it so difficult to develop new sources of energy, or to refine it into usable products, we will get pretty much what we deserve. So when you think of $3 a gallon, says Bray, you should also think: 1976.

Source: Tom Bray, "NIMBY pressures....and oil slicks," Washington Times, May 24, 2004.

 

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