UPI – United Press International
NEW YORK, NY – Analysts say Hurricane Katrina has exposed long simmering problems with the capacity of the nation’s oil refineries.
Katrina shut down nearly all the Gulf Coast’s offshore oil and gas production for over a week and only 60 percent has been restored, the New York Times reported.
The last American refinery was built nearly 30 years ago and there is only one new one in the works.
“There is now a greater realization that we don’t have much extra capacity,” said Edward H. Murphy, a refining specialist at the American Petroleum Institute.
This year, the refining margin — the difference between the cost of buying crude oil and selling refined end products — has exceeded $20 a barrel, far above the long-term average of $6, the newspaper said.
Industry critics allege oil companies have intentionally limited refining capacity to improve the bottom line.
“They are supposed to compete and bring the lowest price to consumers,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights. “But the truth is that a small number of oil companies cheat by working together by artificially reducing supplies.”