Refinery capacity won't be expanded


Oil companies can see the writing on the wall, they won't invest unless they can get a return
Another illustration of the law of unintended consequences.

A push from Congress and the White House for huge increases in biofuels such as ethanol, is prompting the oil industry to scale back its plans for refinery expansions - which could keep gasoline prices high, possibly for years to come.

With President Bush calling for a 20 percent drop in gasoline use and the Senate now debating legislation for huge increases in ethanol production, oil companies see growing uncertainty about future gasoline demand and little need to expand refineries or build new ones.

Oil industry executives no longer believe there will be the demand for gasoline over the next decade to warrant the billions of dollars in refinery expansions - as much as 10 percent increase in new refining capacity - they anticipated as recently as a year ago.

Biofuels such as ethanol and efforts to get automakers to build more fuel-efficient cars and SUVs have been portrayed as key to countering high gasoline prices, but it is likely to do little to curb costs at the pump today, or in the years ahead as refiners reduce gasoline production.

Remember this when a Senator from New York rants about oil company profits.

It's a simple law, and it is as inevitable as gravity. Government interference always brings higher prices.

— NeoWayland

Posted: Sun - June 17, 2007 at 01:33 PM  Tag


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