The title of this article may sound like some sort of alarmist doom porn from people who are warning about the downstream impacts of the green new deal, but it’s actually quite serious. The statement that there will probably never be another new oil refinery built in the United States came from Mike Wirth, the CEO of Chevron and a person who should know a thing or two about how the oil and gas industry works. We previously examined the reality that we are heading for devastating shortages of gasoline, diesel, and jet fuel because of the number of oil refineries that have gone offline or been converted to process biofuels. Ed Morrissey reported on Joe Biden’s demands that the “greedy refiners” move to “turn the refineries back on” and produce more fuel. Industry leaders responded with a letter explaining how ludicrous that demand was. Now, as the Institute for Energy Research explains, the reality is setting in that there probably won’t be any new refineries being constructed and it’s entirely the fault of the Democrats’ policies.
Chevron CEO Mike Wirth does not expect another oil refinery to be built in the United States ever again, due to federal government policies. The last significant refinery built in the United States was in 1976. (A small refinery came online in 2020 in North Dakota). Over the last two years, due to reduced demand from the pandemic and President Biden’s stated policy to reduce the demand for petroleum products, U.S. refineries have been shut down or repurposed to become biofuel refineries.
In a business where investments have a payout period of a decade or more, it is unlikely for investment to be spent on policies where the demand is to be reduced. Wirth stated rhetorically, “How do you go to your board, how do you go to your shareholders and say ‘we’re going to spend billions of dollars on new capacity in a market that is, you know, the policy is taking you in the other direction.”
This isn’t some idle threat or fit of pique on the part of the oil and gas industry. It’s just basic mathematics and economics. The Democrats, now led by Joe Biden, have been warning everyone for years that they were going to find a way to move the world away from the use of fossil fuels. Biden promised to “end fossil fuels” on the campaign trail and enacted policies moving in that direction starting on his first day in office. The oil and gas industry was listening and they’ve responded accordingly. When you told them who you were, they believed you.
The thing that will prevent the “restarting” of the refineries we’ve lost or the construction of new ones is the same situation that slowed and eventually halted the construction of new nuclear power plants in the United States over the past several decades. Construction takes years and massive amounts of money. That issue is exacerbated by the endless, expensive regulatory hoops that must be jumped through. In order for a nuke plant to be able to show a profit, it has to remain operational for decades, otherwise, investors will not put money into the project. And if politicians and the public are acting squeamish about your product, confidence in the long-term prospects is further diminished.
The same applies to refineries, albeit on a somewhat smaller scale. They cost a ton of money to build and bring online. Nobody is going to flush that much cash into such a project when Uncle Sam is threatening to effectively outlaw your product in the next decade. And once a refinery is shut down or converted to produce biofuels, it can’t simply be “switched back on” or reverted to oil processing at the drop of a hat. It’s simply not viable.
The green warriors out there are probably tooting horns and throwing confetti into the air over the idea of the end of oil refineries in America. But when the reality of the coming liquid fuel shortage fully hits home, they will be singing a different tune. Renewable energy still only accounts for at most 13% of the power consumed in this country. We aren’t remotely close to being able to fully convert to electric vehicles, to say nothing of being able to recharge them all. And very nearly all of the food that you eat and the other products you purchase are brought to market in trucks and rail cars that use diesel to operate. There is a massive crisis on the way and everyone with the sense that God gave a goat is trying to warn you about it. And it’s a crisis of your own creation.