price of gasoline

We have all been hurting with the increasing price of gas. Some blame President Bush. (O.K. most do. Others blame Congress.) So, I decided to research this price gouging story Both sides of the political isle are to blame for this neglected issue, along with the oil barons. While the refining of oil has been improving, the number of refineries has been dropping. In 1982 there were 301 refineries producing 17.9 million barrels of oil per day. Today, 149 refineries are producing 17.4 million barrels of oil per day. The United States, alone, consumes 20.7 million barrels of oil per day. While refining capacity is not the only factor in the price of gas, there has not been a refinery built since 1976. Why? Building a refinery is very expensive. There are many environmental restrictions. Many don't want a refinery in their neighborhood. So where to build? The solution? It would take many years to build new refinery. One company, the Arizona Clean Fuels company has been trying to build one since 1998. Seven years later they obtained a permit. The plants location was changed twice because of environmental restrictions and land disputes. The refinery is projected to have a $3.7 billion total price tag. The EIA recorded per-barrel profits of $5.29 in 2006; at that rate, the 150,000-barrel-per-day refinery would need to operate for almost 13 years before its profits outweighed the cost of building it.In short, the reason for not adding more refineries is straightforward: It's hard, and it's expensive. The reason that we have so few in the first place is more complicated. In the 1980s and 1990s, there was a surplus of refining capacity. Then, over the course of two decades, half of the plants shut down. In 2001, Oregon senator Ron Wyden presented to Congress a report arguing that these closings were calculated choices intended to increase oil company profits. Fewer refineries means less product in circulation, which means a lower supply-to-demand ratio and more profit. Wyden's report cites internal memos from the oil industry implying that this reduction was a deliberate attempt to curtail profit losses. The economic pressures of oversupply could have led to plant closings even without a more calculated decision, of course. In 2005, the head of the National Petrochemical and Refiners Association testified at a House hearing that the rate of return on investment in refining averaged just five and a half percent from 1993 to 2003. So what is your solution?

Sources
Porter, Adam. "Global refinery shortage shifts power balance." BBC News. 2 Oct. 2005.Mouawad, Jad. "No New Refineries in 29 Years? There Might Well Be a Reason." The New York Times. 9 May 2005.Schoen, John W. "U.S. refiners stretch to meet demand." MSNBC. 22 Nov. 2004.Reynolds, Sarah. "East County oil refinery will move." Yuma Sun. 5 Feb. 2008.Associated Press. "Arizona refinery permit took seven years, Senate told." 14 Jul. 2006.Wyden, Ron. "The Oil Industry, Gas Supply and Refinery Capacity: More Than Meets the Eye." 14 Jun. 2001.109th United States Congress. "Petroleum Refineries: Will Record Profits Spur Investment in New Capacity?" House Subcommittee on Energy and Resources. 19 Oct. 2005.