The Hovensa Oil Refinery cut its emissions to a fraction of the original design, yet is still one of the most efficient refineries in the world
Why is it that as oil prices lower, gas prices don’t keep dropping?

Well the folks over at CNN/Money have already reported that Gas prices are up as I’m sure just about everyone here in the states has noticed. The problem however is that the rest of the world is not feeling the hit as well.

A little research into the problem and you find out why the U.S. has faced rising gas prices for the past few years. It’s not the fault of rising oil prices; it’s actually the fault of the government. An article published over at Bulk Transporter gives a fair breakdown that Lack of refining capacity is what is killing us. This really isn’t a surprise since the last new oil refinery in the U.S. built was 31 years ago.

This lack of refining capacity can be attributed to several things. One is the fact that new refineries aren’t being built. Old ones are closing because they are coming up on the end of their lives and need to be replaced with newer ones. To make that worse, it is hard to get permits to build refineries due to clean air laws, and environmental groups contest the construction of these refineries.

One such example is the refinery proposed to be built in Yuma County, Arizona. Already the “Yuma County Citizens for Clean Air” is vowing to take this to the EPA as the Arizona State Government has issued the permit to build the refinery. This has already been 5 years in making, with likely many more ahead if these Environmental groups keep the issue tied up in litigation.

The other problem is that the current batch of oil refineries are outputting at 95% capacity or higher. We are producing as much gasoline as possible currently in the U.S. and without more refineries, and more efficient refiners we are unlikely to see the price of gasoline ease anytime in the near future.

Refineries are also more costly to produce these days. With stricter pollution requirements to adhere to, companies are looking to modern technology to help reduce the amount of pollution these plants produce. The good thing is that older refineries are being upgraded regularly, and right now refining capacity is down about 20% due to upgrades and overhauls to older refinery stock. Technology has improved to allow the cleanest refineries ever to be built, but at a hefty price tag around 2.5 billion USD each. A modern European refinery takes around 5 years to construct and become fully operational.

In the 1950's North America had about 320 oil refineries and produced about 6 million barrels of gasoline. As of 2005, the U.S. has about 140 Refineries and output a whopping 17 million barrels of Gasoline. Technology sure has come a long way, but is technology advancement fast enough to help ease gas prices or are more refineries an eventual answer we need to address.

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