Cracking and Pivoting

The President today asked Congress for a gasoline tax holiday to alleviate the cost of gasoline and diesel in the country. This is not the solution.

With the exception of a 200,000 barrel/day refinery in Garyville, Louisiana, built by Marathon Petroleum in July 2020, there has not been a gasoline/diesel refinery built since 1977. Environmental concerns, permits and lawsuits have restricted the construction of new refinery capacity for 45 years.

In the same month of the completion of the above refinery in 2020, refinery capacity in the US peaked. Since then, it has dropped by around one million barrels/day. Many refineries have been retooled to produce “green” energy liquids and others have been shut down.

While it has been suggested that the oil companies are not cooperating with the attempt to alleviate high-refined product prices by producing more refined product, this just simply isn’t true. Refinery capacity utilization is 93.7% currently, which is actually somewhat above the average for the last decade.