Think Gas Prices are High Now? Wait Until a Hurricane Hits the Gulf Coast

A single hurricane could catapult gasoline prices beyond recent record highs, unless America adds to a refining capacity that’s less today than it was 40 years ago even though the U.S. population is 50 percent larger.The global head of energy analysis for Oil Price Information Service, Tom Kloza, warned earlier this month that “apocalyptic numbers come into play with hurricanes.”For the rest of the summer, he said, Americans have to “cross our fingers that no refining infrastructure gets damaged by hurricanes or by the electric grid,” which shows signs of weakness along the Gulf Coast.America needs “a little bit of the luck of the Irish,” he said, but with forecasters predicting an above normal hurricane season, shamrocks and leprechauns aren’t a strategy to avert disaster.America has just 129 petroleum refineries, all operating near full tilt at 95 percent capacity, with 100 percent not possible because of regularly required maintenance.The New York Times reported in 2005 that America had less than half the number of refineries it did in 1981, shrinking output by 10 percent. “At the same time, gasoline consumption has risen by 45 percent,” it said.The solution seems obvious: build, baby, build. Yet America’s policymakers often ignore the obvious until it’s too late, or cave to the demands of environmental lobbyists.The boss of Chevron, Mike Wirth, “does not expect another oil refinery to be built in the United States ever again,” the Institute for Energy Research wrote last month,The Institute agreed. “New refineries are unlikely to be built in the United States due to daunting environmental standards and policies that the Biden administration has been implementing to reduce petroleum product consumption in the future.”They concluded, “Shockingly high prices for energy is the outgrowth of those policies,” and that’s even if no hurricane ever makes landfall again — which is impossible.So, when President Biden traveled to the Middle East, hat in hand, to beg for more oil output — or demanded domestic producers do the same — he addressed only half of America’s energy equation.It’s the equivalent of pushing farmers to produce more wheat with no mills to grind it into flour, and also fails to take into account that less than half of each barrel of oil ends up as gasoline, anyway.No one has broken ground for an American refinery since President Ford was in the White House. The newest “with significant downstream unit capacity,” according to the U.S. Energy Information Administration, came online back in 1977.That facility is just outside New Orleans, and was one of eight knocked offline by Hurricane Katrina in 2005, which sent gas prices past $3 a gallon for the first time. Prices rose by 46 cents a gallon in the first six days after the storm.Saudi Arabia’s foreign minister, Prince Faisal bin Farhan Al Saud, told reporters in Tokyo last week, that the kingdom doesn’t “see a lack of oil in the market” as the problem. “There is a lack of refining capacity,” he said, “[S]o we need to invest more in refining capacity.” This simple truth also reduced Mr. Biden’s release of oil from the Strategic Petroleum Reserve to empty symbolism.“It really has nowhere to go,” a Republican congressman from South Carolina, Jeff Duncan, said of the more than 1 billion barrels released per day.“Our refineries are full. Our pipelines are full. As a result, America’s emergency reserves are being sent to China, which is using it to build up its own strategic reserves.”He added, “[I]f a hurricane strikes the Gulf of Mexico, or a major pipeline goes down, how are we going to respond to that if we deplete these reserves?”An America that runs on solar and wind is an appealing dream, but until such technologies prove themselves, our economy will continue to run on oil.The time to build up our capacity to refine it into gasoline is when the sun is shining, because sooner or later, even the luck of the Irish runs out, and the next Katrina hits.

Think Gas Prices are High Now? Wait Until a Hurricane Hits the Gulf Coast

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