Random Numbers reminds us that a good chunk of the high gasoline prices we’re seeing are due to refining capacity limitations:
We have not built a new oil refinery in this country since Led Zeppelin was on tour. Combined with an expansion of the different types of gas formulations throughout the country, and there just isn’t enough to go around at any one time, and there is no reserve capacity to prevent wild fluctuations in price. Refineries and storage facilities can be built which meet clean air standards if only we allow it. Yet we don’t allow any new construction. It used to be the NIMBY (Not In My Back Yard) syndrome that prevented new construction of refineries and/or storage tanks, but it has evolved into BANANA (Build Absolutely Nothing Anywhere Near Anything).
And when a commenter (rightly) points out that increased demand for crude oil from India and China has a significant impact on prices, Random Numbers (rightly) points out that the refining capacity issue is something we can impact, demand from other nations is not.
Why not do what we can? I’ve long suspected that the calls for drilling in the ANWR were a chip to be bargained away for more refineries. That doesn’t appear to be the case, but the ANWR plan (with which I agree in principle) isn’t going to have a significant impact on the supply of crude when China’s growing appetite is factored in.
Additional refining capacity is needed. Even if we suddenly find a lot of cheap oil in the backyard while shootin’ at some food, it’s got to be refined. And right now we couldn’t really do it.