Flame — HabitableZone

Flame » in reply to You guys make it sound like the oil companies have been clamouring to build refineries.

It's hardly surprising
Larry J — (archived)

First, a refinery is complex and expensive to build. From what I've read, it typically can take years to build one at a cost of over a billion dollars. That's a big chunk of change. Second, I wonder how much of that cost is consumed by complying with tons of environmental regulations. Of course, no one wants to go back to the bad old days of the 1960s and before, but overregulation adds tremendous costs to projects. Add to that the political barriers erected by the NIMBY crowd and the idea of building new refineries is a tough sell.

Ultimately, if by some means (say, shale oil) we found a way to greatly increase our supply of oil, it wouldn't amount to much if we don't add refinery capacity. Not very many people can directly use crude oil. We need refined product. That's why Bush's release of oil from the strategic reserve didn't do much of anything to lower gasoline prices. Things that impede the supply of refined product will drive up the costs.

Supply and demand isn't just a good idea, it's the fundamental law of economics. Demand for oil and refined products is increasing worldwide. Supply is essentially flat, except for disruptions like hurricanes. Until we can find a way to significantly lower demand (hopefully without tanking our economy in the process), anyone who says they want to "end our dependence on foreign oil" but who opposes increasing domestic production (oil and product) is simply blowing smoke. Conservation is a great idea, but unless you can actually cut the growth rate in demand to 0% or less, we're going to need more supply. Alternatives like hydrogen hold great potential but only to the point where they're economically viable.

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