Much has been made over the fact that a major refinery has not been built in the U.S. since the 1970. Rising oil prices over much of the decade and gasoline prices north of $3 per gallon created cries by many that the country was in desperate need of new capacity.
Recently, the Energy Information released data that showed total U.S. refining capacity increased by 14% between 1997 and 2009, with the average annual capacity increase of about 185 thousand barrels per day (Mbbl/d) over this period, equivalent to adding one and a half average-sized refineries each year.
How? Refiners can increase capacity at existing sites by modifying equipment to increase product flow and by adding new distillation units, according to the EIA.
Net refining margins and return on investment reached historic high levels from 2004 to 2007, encouraging several companies to announce expansion plans, per EIA data.
But at times rising demand for gasoline taxed the nation’s refineries, especially after Hurricane Katrina and Hurricane Rita did plenty of damage to facilities along the Gulf Coast.
Over the past several quarters, however, refining margins have declined sharply, and petroleum product demand has declined in response to weak economic activity.
A look at the latest inventory of gasoline and distillates, which includes heating oil and diesel fuel, shows ample supplies are available.
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