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June 4, 2005

Cato: Conservatives “telling fairy tales” About Refining Capacity

The Cato Institute says the Bush administration's proposal to increase refining capacity is based upon misdirected blame for high gasoline prices and that the proposal will not work:
High Pump-Price Fairy Tales, by Jerry Taylor and Peter Van Doren, Cato: … what's driving these high gasoline prices … Conservatives think it's largely a function of … bureaucratic red tape, anti-growth environmental extremists, and "not-in-my-back-yard" community activists … prevent[ing] new oil refineries from coming online. This in turn has starved the market of the gasoline and – viola! – record prices are the logical result. It's a convenient story line for the Right. Unfortunately, the narrative is wrong.… Accordingly, President Bush's proposals to provide low-cost real estate in the boonies and to somewhat reduce plant costs through regulatory improvements simply won't result in any new refining capacity. We'd love to blame big government and enviro-whackos for today's high gasoline prices (we do, after all, work for the Cato Institute). But telling fairy tales about the market does no one any favors. Prices are high because of global supply-and-demand factors, and Congress can do little about it.
Update: Here is a graph of refining capacity and a link to a good source of additional information on the refining process, sources of data, additional graphs, etc. from the DOE:
Note: Click on Image for Larger Version Link: Information on Refining (DOE Publication)

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