Refining crunch

The supply of oil flowing from the Mideast is only one factor in rising gasoline prices.

One of Americans’ most treasured freedoms is the freedom to jump in the car and drive wherever they want. So when gasoline prices start to rise, as they have recently, it doesn’t take long for Americans to feel the pain.

According to a story on Tuesday’s Journal-World business page, the U.S. Energy Department says the nation’s average retail price for a gallon of gasoline has passed $2 a gallon for the first time. The price in Lawrence is hovering just below that, but the lowest price the J-W Pump Patrol could find Monday was $1.92.

And every indication is that the price will continue to rise through the summer.

Because a large portion of the oil used by American consumers is imported from the Mideast, it’s natural to assume that the unsettled political situation in that part of the world is responsible for the price increases. As oil prices jumped to almost $42 a barrel on Monday Saudi Arabia was proposing that OPEC raise its oil output by 6 percent to help stabilize the price.

But increasing crude oil production may not solve the problem for American consumers. Bottlenecks at U.S. oil refineries also are an important factor in the cost of gasoline.

A report last week by Bloomberg financial news service quoted James Mulva, chief executive of ConocoPhillips saying, “There is plenty of oil on world markets. It’s a question of limited refining capacity.”

For various reasons — including environmental regulations and cost of construction — no new refineries have been built in the U.S. since 1976, according to the National Petrochemical & Refiners Assn. (NFPA). Between 1977 and 2002, the number of U.S. refineries dropped from 282 to 153, according to the U.S. Department of Energy. Although the refining capacity increased by 2.4 percent during that time, the U.S. demand for gasoline grew by 27 percent.

Regional requirements for different fuel formulations also complicate the issue because they reduce the flexibility of U.S. refiners. Those requirements also make it more difficult for foreign refiners to meet U.S. demands.

So even before the summer driving season begins, the NFPA reports that U.S. refineries are operating at about 93 percent of capacity. That doesn’t bode well for either prices or supplies of gasoline this summer.

In recent years, Americans have gotten a bit complacent about gasoline prices and fuel consumption. A combination of global and domestic factors may be about to put the brakes on that attitude. Finding a way to increase America’s oil refining capacity is part of the answer.