US appears to have built its last refinery
No new refineries have been built in the US in the past 25 years. And petroleum industry experts say anyone would have to be crazy to launch such an effort -- even though present refineries are running at nearly 100 % of capacity and local gasoline shortages are beginning to crop up.
Why does the industry appear to have built its last refinery?
Three reasons: Refineries are not particularly profitable, environmentalists fight planning and construction every step of the way and government red-tape makes the task all but impossible. The last refinery built in the US was in Garyville, Louisiana, and it started up in 1976.
Energy proposed building a refinery near Portsmouth, Virginia, in the late 1970s, environmental groups and local residents fought the plan -- and it took almost nine years of battles in court and before federal and state regulators before the company cancelled the project in 1984.
Industry officials estimate the cost of building a new refinery at between $ 2 bn and $ 4 bn -- at a time the
industry must devote close to $ 20 bn over the next decade to reducing the sulphur content in gasoline and other
fuels -- and approval could mean having to collect up to 800 different permits. As if those hurdles weren't enough,
the industry's long-term rate of return on capital is just 5 % -- less than could be realized by simply buying US
"I'm sure that at some point in the last 20 years someone has considered building a new refinery," says James Halloran, an energy analyst with National City Corp. "But they quickly came to their senses," he adds.