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Regulatory hurdles still remain however

Voters in Elk Point, South Dakota, have approved the construction of the nation's first new gasoline refinery in 32 years. To be built by Hyperion Energy, the refinery will process 400,000 barrels a day of Canadian tar sands crude into low-sulfur diesel, gasoline, and jet fuel. Supporters say the plant, which will be the world's cleanest, will reduce dependence on Mideast oil, as well as help to lower gas prices.

The new refinery means billions of dollars of capital investment, along with thousands of high-paying jobs, and a tremendous economic boom to the tiny community. Even still, the battle to approve the refinery was a closely-fought one, with environmental groups spending tens of thousands of advertising dollars to persuade residents to vote against it. The final vote was 3,932 in favor, 2,832 against -- a massive turnout in this small town of 10,000 residents.

While oil prices are responsible for the majority of gasoline's increase, part of the problem is restricted refinery capacity. With the nation's gas being produced by an increasingly rickety network of aging refineries, a substantial percentage of U.S. demand is now refined overseas. Gasoline is more expensive to ship than oil, which raises prices and creates potential supply bottlenecks. A shortage of refinery capacity was also responsible for gasoline shortages after Hurricane Katrina struck, when the temporary closure of several refineries caused prices in some southern states to more than double.

Approval for the plant is not yet absolute, however, as legal action continues to bar construction from beginning. According to Ed Cable, the leader of one of the groups opposing construction, "We have strategies in place to slow or delay all the permit processes." The first such is a legal challenge to the county's zoning approval, filed in state court.

Hyperion must also win the approval of state and federal regulators, a process that requires over 1,000 separate permit applications and is expected to take several years.





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